Correlation Between Triumph and Loar Holdings

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

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

Diversification Opportunities for Triumph and Loar Holdings

0.78

Correlation Coefficient

Triumph  Loar Holdings

Poor diversification

The 3 months correlation between Triumph and Loar is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Group and Loar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loar Holdings and Triumph 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 Triumph Group are associated (or correlated) with Loar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loar Holdings has no effect on the direction of Triumph i.e., Triumph and Loar Holdings go up and down completely randomly.

Pair Corralation between Triumph and Loar Holdings

Considering the 90-day investment horizon Triumph Group is expected to generate 0.54 times more return on investment than Loar Holdings. However, Triumph Group is 1.84 times less risky than Loar Holdings. It trades about 0.05 of its potential returns per unit of risk. Loar Holdings is currently generating about -0.01 per unit of risk. If you would invest  1,831  in Triumph Group on September 14, 2024 and sell it today you would earn a total of  30.00  from holding Triumph Group or generate 1.64% return on investment over 90 days.

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

Triumph Group  vs.  Loar Holdings

Triumph Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Triumph Group are ranked lower than 12 (%) 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.

Loar Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Loar Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Loar Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Triumph and Loar Holdings

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

The idea behind Triumph Group and Loar Holdings 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.