Correlation Between Titan Machinery and SNDL

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

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

Diversification Opportunities for Titan Machinery and SNDL

-0.24

Correlation Coefficient

Titan Machinery  SNDL

Very good diversification

The 3 months correlation between Titan and SNDL is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Titan Machinery i.e., Titan Machinery and SNDL go up and down completely randomly.

Pair Corralation between Titan Machinery and SNDL

Given the investment horizon of 90 days Titan Machinery is expected to generate 1.15 times more return on investment than SNDL. However, Titan Machinery is 1.15 times more volatile than SNDL Inc. It trades about 0.07 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.1 per unit of risk. If you would invest  1,545  in Titan Machinery on November 29, 2024 and sell it today you would earn a total of  156.00  from holding Titan Machinery or generate 10.1% 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.  SNDL Inc

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.

SNDL Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days SNDL Inc 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 fundamental indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Titan Machinery and SNDL

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

The idea behind Titan Machinery and SNDL 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.