Correlation Between Titan Machinery and Global Industrial

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

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

Diversification Opportunities for Titan Machinery and Global Industrial

-0.01

Correlation Coefficient

Titan Machinery  Global Industrial

Good diversification

The 3 months correlation between Titan and Global is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Global Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Industrial 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 Global Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Industrial has no effect on the direction of Titan Machinery i.e., Titan Machinery and Global Industrial go up and down completely randomly.

Pair Corralation between Titan Machinery and Global Industrial

Given the investment horizon of 90 days Titan Machinery is expected to generate 2.22 times more return on investment than Global Industrial. However, Titan Machinery is 2.22 times more volatile than Global Industrial Co. It trades about 0.13 of its potential returns per unit of risk. Global Industrial Co is currently generating about -0.05 per unit of risk. If you would invest  1,387  in Titan Machinery on December 27, 2024 and sell it today you would earn a total of  403.00  from holding Titan Machinery or generate 29.06% return on investment over 90 days.

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

Titan Machinery  vs.  Global Industrial Co

Titan Machinery

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 10 (%) 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.

Global Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Global Industrial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Titan Machinery and Global Industrial

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

The idea behind Titan Machinery and Global Industrial Co 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.