Correlation Between Titan International and Canopy Growth

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

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

Diversification Opportunities for Titan International and Canopy Growth

-0.67

Correlation Coefficient

Titan International  Canopy Growth

Excellent diversification

The 3 months correlation between Titan and Canopy is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Titan International and Canopy Growth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canopy Growth Corp 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 Canopy Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canopy Growth Corp has no effect on the direction of Titan International i.e., Titan International and Canopy Growth go up and down completely randomly.

Pair Corralation between Titan International and Canopy Growth

Considering the 90-day investment horizon Titan International is expected to generate 0.56 times more return on investment than Canopy Growth. However, Titan International is 1.79 times less risky than Canopy Growth. It trades about 0.14 of its potential returns per unit of risk. Canopy Growth Corp is currently generating about -0.23 per unit of risk. If you would invest  692.00  in Titan International on December 27, 2024 and sell it today you would earn a total of  204.00  from holding Titan International or generate 29.48% return on investment over 90 days.

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

Titan International  vs.  Canopy Growth Corp

Titan International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Titan International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Titan International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Canopy Growth Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canopy Growth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Titan International and Canopy Growth

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

The idea behind Titan International and Canopy Growth Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.