Correlation Between Titan Machinery and Nova Vision

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

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

Diversification Opportunities for Titan Machinery and Nova Vision

0.29

Correlation Coefficient

Titan Machinery  Nova Vision

Modest diversification

The 3 months correlation between Titan and Nova is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Nova Vision Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Vision Acquisition 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 Nova Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Vision Acquisition has no effect on the direction of Titan Machinery i.e., Titan Machinery and Nova Vision go up and down completely randomly.

Pair Corralation between Titan Machinery and Nova Vision

Given the investment horizon of 90 days Titan Machinery is expected to under-perform the Nova Vision. But the stock apears to be less risky and, when comparing its historical volatility, Titan Machinery is 3.25 times less risky than Nova Vision. The stock trades about -0.06 of its potential returns per unit of risk. The Nova Vision Acquisition is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,080  in Nova Vision Acquisition on October 3, 2024 and sell it today you would earn a total of  3,020  from holding Nova Vision Acquisition or generate 279.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.75%
Values	Daily Returns

Titan Machinery  vs.  Nova Vision Acquisition

Titan Machinery

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Titan Machinery is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Nova Vision Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova Vision Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nova Vision 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 Nova Vision

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

The idea behind Titan Machinery and Nova Vision Acquisition 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.