Correlation Between Titan Machinery and 50249AAF0

Can any of the company-specific risk be diversified away by investing in both Titan Machinery and 50249AAF0 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 50249AAF0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Titan Machinery and LYB 125 01 OCT 25, you can compare the effects of market volatilities on Titan Machinery and 50249AAF0 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 50249AAF0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and 50249AAF0.

Diversification Opportunities for Titan Machinery and 50249AAF0

0.38

Correlation Coefficient

Titan Machinery  50249AAF0

Weak diversification

The 3 months correlation between Titan and 50249AAF0 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and LYB 125 01 OCT 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYB 125 01 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 50249AAF0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYB 125 01 has no effect on the direction of Titan Machinery i.e., Titan Machinery and 50249AAF0 go up and down completely randomly.

Pair Corralation between Titan Machinery and 50249AAF0

Given the investment horizon of 90 days Titan Machinery is expected to generate 5.56 times more return on investment than 50249AAF0. However, Titan Machinery is 5.56 times more volatile than LYB 125 01 OCT 25. It trades about 0.03 of its potential returns per unit of risk. LYB 125 01 OCT 25 is currently generating about -0.1 per unit of risk. If you would invest  1,365  in Titan Machinery on October 9, 2024 and sell it today you would earn a total of  27.00  from holding Titan Machinery or generate 1.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	86.89%
Values	Daily Returns

Titan Machinery  vs.  LYB 125 01 OCT 25

Titan Machinery

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 1 (%) 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.

LYB 125 01

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days LYB 125 01 OCT 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 50249AAF0 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Titan Machinery and 50249AAF0

The main advantage of trading using opposite Titan Machinery and 50249AAF0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, 50249AAF0 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 50249AAF0 will offset losses from the drop in 50249AAF0's long position.

The idea behind Titan Machinery and LYB 125 01 OCT 25 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.