Correlation Between Titan Machinery and American Healthcare

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

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

Diversification Opportunities for Titan Machinery and American Healthcare

0.53

Correlation Coefficient

Titan Machinery  American Healthcare

Very weak diversification

The 3 months correlation between Titan and American is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and American Healthcare REIT, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Healthcare REIT, and Titan Machinery 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 Machinery are associated (or correlated) with American Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Healthcare REIT, has no effect on the direction of Titan Machinery i.e., Titan Machinery and American Healthcare go up and down completely randomly.

Pair Corralation between Titan Machinery and American Healthcare

Given the investment horizon of 90 days Titan Machinery is expected to under-perform the American Healthcare. In addition to that, Titan Machinery is 1.93 times more volatile than American Healthcare REIT,. It trades about -0.15 of its total potential returns per unit of risk. American Healthcare REIT, is currently generating about -0.07 per unit of volatility. If you would invest  2,835  in American Healthcare REIT, on September 22, 2024 and sell it today you would lose (60.00) from holding American Healthcare REIT, or give up 2.12% of portfolio value over 90 days.

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

Titan Machinery  vs.  American Healthcare REIT,

Titan Machinery

Risk-Adjusted Performance

0 of 100

Very Weak

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

American Healthcare REIT,

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Healthcare REIT, are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical indicators, American Healthcare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Titan Machinery and American Healthcare

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

The idea behind Titan Machinery and American Healthcare REIT, 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.