Correlation Between Titan Machinery and FLT Old

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

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

Diversification Opportunities for Titan Machinery and FLT Old

0.0

Correlation Coefficient

Titan Machinery  FLT Old

Pay attention - limited upside

The 3 months correlation between Titan and FLT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and FLT Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLT Old 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 FLT Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLT Old has no effect on the direction of Titan Machinery i.e., Titan Machinery and FLT Old go up and down completely randomly.

Pair Corralation between Titan Machinery and FLT Old

Given the investment horizon of 90 days Titan Machinery is expected to under-perform the FLT Old. In addition to that, Titan Machinery is 1.76 times more volatile than FLT Old. It trades about -0.06 of its total potential returns per unit of risk. FLT Old is currently generating about 0.05 per unit of volatility. If you would invest  21,820  in FLT Old on October 25, 2024 and sell it today you would earn a total of  4,973  from holding FLT Old or generate 22.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	66.8%
Values	Daily Returns

Titan Machinery  vs.  FLT Old

Titan Machinery

Risk-Adjusted Performance

5 of 100

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 displayed solid returns over the last few months and may actually be approaching a breakup point.

FLT Old

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Titan Machinery and FLT Old

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

The idea behind Titan Machinery and FLT Old 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.