Correlation Between SIFCO Industries and Triumph

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

By analyzing existing cross correlation between SIFCO Industries and Triumph Group, you can compare the effects of market volatilities on SIFCO Industries and Triumph 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 SIFCO Industries with a short position of Triumph. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIFCO Industries and Triumph.

Diversification Opportunities for SIFCO Industries and Triumph

-0.61

Correlation Coefficient

SIFCO Industries  Triumph

Excellent diversification

The 3 months correlation between SIFCO and Triumph is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding SIFCO Industries and Triumph Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triumph Group and SIFCO Industries 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 SIFCO Industries are associated (or correlated) with Triumph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triumph Group has no effect on the direction of SIFCO Industries i.e., SIFCO Industries and Triumph go up and down completely randomly.

Pair Corralation between SIFCO Industries and Triumph

Considering the 90-day investment horizon SIFCO Industries is expected to under-perform the Triumph. But the stock apears to be less risky and, when comparing its historical volatility, SIFCO Industries is 1.78 times less risky than Triumph. The stock trades about -0.17 of its potential returns per unit of risk. The Triumph Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,865  in Triumph Group on December 28, 2024 and sell it today you would earn a total of  681.00  from holding Triumph Group or generate 36.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

SIFCO Industries  vs.  Triumph Group

SIFCO Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIFCO Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Triumph Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Triumph Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Triumph demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIFCO Industries and Triumph

The main advantage of trading using opposite SIFCO Industries and Triumph positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIFCO Industries position performs unexpectedly, Triumph 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 Triumph will offset losses from the drop in Triumph's long position.

The idea behind SIFCO Industries and Triumph Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.