Correlation Between Titan Machinery and Cedar Realty

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

By analyzing existing cross correlation between Titan Machinery and Cedar Realty Trust, you can compare the effects of market volatilities on Titan Machinery and Cedar Realty 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 Cedar Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and Cedar Realty.

Diversification Opportunities for Titan Machinery and Cedar Realty

0.54

Correlation Coefficient

Titan Machinery  Cedar Realty

Very weak diversification

The 3 months correlation between Titan and Cedar is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Cedar Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Realty Trust 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 Cedar Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Realty Trust has no effect on the direction of Titan Machinery i.e., Titan Machinery and Cedar Realty go up and down completely randomly.

Pair Corralation between Titan Machinery and Cedar Realty

Given the investment horizon of 90 days Titan Machinery is expected to generate 0.83 times more return on investment than Cedar Realty. However, Titan Machinery is 1.21 times less risky than Cedar Realty. It trades about 0.09 of its potential returns per unit of risk. Cedar Realty Trust is currently generating about 0.06 per unit of risk. If you would invest  1,425  in Titan Machinery on September 17, 2024 and sell it today you would earn a total of  53.00  from holding Titan Machinery or generate 3.72% return on investment over 90 days.

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

Titan Machinery  vs.  Cedar Realty Trust

Titan Machinery

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Titan Machinery may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cedar Realty Trust

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Cedar Realty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Titan Machinery and Cedar Realty

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

The idea behind Titan Machinery and Cedar Realty 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.