Correlation Between Titan Machinery and Kite Realty

Can any of the company-specific risk be diversified away by investing in both Titan Machinery and Kite 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 Kite 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 Kite Realty Group, you can compare the effects of market volatilities on Titan Machinery and Kite 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 Kite Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and Kite Realty.

Diversification Opportunities for Titan Machinery and Kite Realty

-0.51

Correlation Coefficient

Titan Machinery  Kite Realty

Excellent diversification

The 3 months correlation between Titan and Kite is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group 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 Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of Titan Machinery i.e., Titan Machinery and Kite Realty go up and down completely randomly.

Pair Corralation between Titan Machinery and Kite Realty

Given the investment horizon of 90 days Titan Machinery is expected to generate 2.03 times more return on investment than Kite Realty. However, Titan Machinery is 2.03 times more volatile than Kite Realty Group. It trades about 0.06 of its potential returns per unit of risk. Kite Realty Group is currently generating about -0.21 per unit of risk. If you would invest  1,545  in Titan Machinery on November 28, 2024 and sell it today you would earn a total of  143.00  from holding Titan Machinery or generate 9.26% return on investment over 90 days.

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

Titan Machinery  vs.  Kite Realty Group

Titan Machinery

Risk-Adjusted Performance

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.

Kite Realty Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kite Realty Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Titan Machinery and Kite Realty

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

The idea behind Titan Machinery and Kite Realty Group 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.