Correlation Between MYT Netherlands and Titan Machinery

Can any of the company-specific risk be diversified away by investing in both MYT Netherlands 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 MYT Netherlands and Titan Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MYT Netherlands Parent and Titan Machinery, you can compare the effects of market volatilities on MYT Netherlands 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 MYT Netherlands with a short position of Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of MYT Netherlands and Titan Machinery.

Diversification Opportunities for MYT Netherlands and Titan Machinery

0.06

Correlation Coefficient

MYT Netherlands  Titan Machinery

Significant diversification

The 3 months correlation between MYT and Titan is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding MYT Netherlands Parent and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and MYT Netherlands 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 MYT Netherlands Parent 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 MYT Netherlands i.e., MYT Netherlands and Titan Machinery go up and down completely randomly.

Pair Corralation between MYT Netherlands and Titan Machinery

Given the investment horizon of 90 days MYT Netherlands Parent is expected to generate 1.42 times more return on investment than Titan Machinery. However, MYT Netherlands is 1.42 times more volatile than Titan Machinery. It trades about 0.14 of its potential returns per unit of risk. Titan Machinery is currently generating about 0.06 per unit of risk. If you would invest  683.00  in MYT Netherlands Parent on October 24, 2024 and sell it today you would earn a total of  256.00  from holding MYT Netherlands Parent or generate 37.48% return on investment over 90 days.

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

MYT Netherlands Parent  vs.  Titan Machinery

MYT Netherlands Parent

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MYT Netherlands Parent are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, MYT Netherlands exhibited solid returns over the last few months and may actually be approaching a breakup point.

Titan Machinery

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Titan Machinery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MYT Netherlands and Titan Machinery

The main advantage of trading using opposite MYT Netherlands and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MYT Netherlands 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 MYT Netherlands Parent 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.