Correlation Between Titan Company and IShares AEX

Can any of the company-specific risk be diversified away by investing in both Titan Company and IShares AEX 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 IShares AEX 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 iShares AEX UCITS, you can compare the effects of market volatilities on Titan Company and IShares AEX 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 IShares AEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Company and IShares AEX.

Diversification Opportunities for Titan Company and IShares AEX

0.73

Correlation Coefficient

Titan Company  IShares AEX

Poor diversification

The 3 months correlation between Titan and IShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and iShares AEX UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares AEX UCITS 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 IShares AEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares AEX UCITS has no effect on the direction of Titan Company i.e., Titan Company and IShares AEX go up and down completely randomly.

Pair Corralation between Titan Company and IShares AEX

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the IShares AEX. In addition to that, Titan Company is 1.68 times more volatile than iShares AEX UCITS. It trades about -0.1 of its total potential returns per unit of risk. iShares AEX UCITS is currently generating about -0.02 per unit of volatility. If you would invest  8,998  in iShares AEX UCITS on September 4, 2024 and sell it today you would lose (125.00) from holding iShares AEX UCITS or give up 1.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.38%
Values	Daily Returns

Titan Company Limited  vs.  iShares AEX UCITS

Titan Limited

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

iShares AEX UCITS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares AEX UCITS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares AEX is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Titan Company and IShares AEX

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

The idea behind Titan Company Limited and iShares AEX UCITS 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.