Correlation Between Titan Company and EA Series

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

By analyzing existing cross correlation between Titan Company Limited and EA Series Trust, you can compare the effects of market volatilities on Titan Company and EA Series 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 Titan Company with a short position of EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Company and EA Series.

Diversification Opportunities for Titan Company and EA Series

-0.35

Correlation Coefficient

Titan Company  EA Series

Very good diversification

The 3 months correlation between Titan and CCMG is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust and Titan Company 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 Titan Company Limited are associated (or correlated) with EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Titan Company i.e., Titan Company and EA Series go up and down completely randomly.

Pair Corralation between Titan Company and EA Series

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the EA Series. In addition to that, Titan Company is 2.12 times more volatile than EA Series Trust. It trades about -0.05 of its total potential returns per unit of risk. EA Series Trust is currently generating about 0.05 per unit of volatility. If you would invest  2,720  in EA Series Trust on December 29, 2024 and sell it today you would earn a total of  56.00  from holding EA Series Trust or generate 2.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Titan Company Limited  vs.  EA Series Trust

Titan Limited

Risk-Adjusted Performance

Very Weak

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

EA Series Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, EA Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Titan Company and EA Series

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

The idea behind Titan Company Limited and EA Series Trust 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.