Correlation Between Mid-Atlantic Home and Titan Machinery

Can any of the company-specific risk be diversified away by investing in both Mid-Atlantic Home and Titan Machinery at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mid-Atlantic Home and Titan Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mid Atlantic Home Health and Titan Machinery, you can compare the effects of market volatilities on Mid-Atlantic Home and Titan Machinery and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mid-Atlantic Home with a short position of Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-Atlantic Home and Titan Machinery.

Diversification Opportunities for Mid-Atlantic Home and Titan Machinery

0.0

Correlation Coefficient

Mid-Atlantic Home  Titan Machinery

Pay attention - limited upside

The 3 months correlation between Mid-Atlantic and Titan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mid Atlantic Home Health and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and Mid-Atlantic Home is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mid Atlantic Home Health are associated (or correlated) with Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of Mid-Atlantic Home i.e., Mid-Atlantic Home and Titan Machinery go up and down completely randomly.

Pair Corralation between Mid-Atlantic Home and Titan Machinery

If you would invest  1,474  in Titan Machinery on December 17, 2024 and sell it today you would lose (41.00) from holding Titan Machinery or give up 2.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mid Atlantic Home Health  vs.  Titan Machinery

Mid Atlantic Home

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid Atlantic Home Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Mid-Atlantic Home is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Titan Machinery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Titan Machinery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Titan Machinery is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mid-Atlantic Home and Titan Machinery

The main advantage of trading using opposite Mid-Atlantic Home and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-Atlantic Home position performs unexpectedly, Titan Machinery can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Titan Machinery will offset losses from the drop in Titan Machinery's long position.

The idea behind Mid Atlantic Home Health and Titan Machinery pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.