Correlation Between Titan Machinery and Chewy

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Can any of the company-specific risk be diversified away by investing in both Titan Machinery and Chewy 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 Chewy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and Chewy Inc, you can compare the effects of market volatilities on Titan Machinery and Chewy 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 Chewy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and Chewy.

Diversification Opportunities for Titan Machinery and Chewy

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Titan and Chewy is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Chewy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewy Inc 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 Chewy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewy Inc has no effect on the direction of Titan Machinery i.e., Titan Machinery and Chewy go up and down completely randomly.

Pair Corralation between Titan Machinery and Chewy

Given the investment horizon of 90 days Titan Machinery is expected to under-perform the Chewy. But the stock apears to be less risky and, when comparing its historical volatility, Titan Machinery is 1.05 times less risky than Chewy. The stock trades about -0.01 of its potential returns per unit of risk. The Chewy Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,597  in Chewy Inc on September 16, 2024 and sell it today you would earn a total of  629.00  from holding Chewy Inc or generate 24.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Titan Machinery  vs.  Chewy Inc

 Performance 
       Timeline  
Titan Machinery 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 5 (%) 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.
Chewy Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Chewy Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Chewy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Titan Machinery and Chewy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Titan Machinery and Chewy

The main advantage of trading using opposite Titan Machinery and Chewy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, Chewy 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 Chewy will offset losses from the drop in Chewy's long position.
The idea behind Titan Machinery and Chewy Inc 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.
Check out your portfolio center.
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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