Correlation Between Titan International and AGCO

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

By analyzing existing cross correlation between Titan International and AGCO Corporation, you can compare the effects of market volatilities on Titan International and AGCO 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 International with a short position of AGCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan International and AGCO.

Diversification Opportunities for Titan International and AGCO

-0.44

Correlation Coefficient

Titan International  AGCO

Very good diversification

The 3 months correlation between Titan and AGCO is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Titan International and AGCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGCO and Titan International 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 International are associated (or correlated) with AGCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGCO has no effect on the direction of Titan International i.e., Titan International and AGCO go up and down completely randomly.

Pair Corralation between Titan International and AGCO

Considering the 90-day investment horizon Titan International is expected to under-perform the AGCO. In addition to that, Titan International is 1.72 times more volatile than AGCO Corporation. It trades about -0.03 of its total potential returns per unit of risk. AGCO Corporation is currently generating about 0.12 per unit of volatility. If you would invest  8,780  in AGCO Corporation on September 1, 2024 and sell it today you would earn a total of  1,341  from holding AGCO Corporation or generate 15.27% return on investment over 90 days.

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

Titan International  vs.  AGCO Corp.

Titan International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Titan International is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

AGCO

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AGCO Corporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, AGCO displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan International and AGCO

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

The idea behind Titan International and AGCO Corporation 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 Anywhere module to track or share privately all of your investments from the convenience of any device.