Correlation Between Urban Gro and Titan International

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

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

Diversification Opportunities for Urban Gro and Titan International

-0.6

Correlation Coefficient

Urban Gro  Titan International

Excellent diversification

The 3 months correlation between Urban and Titan is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Urban Gro and Titan International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan International and Urban Gro 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 Urban Gro are associated (or correlated) with Titan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan International has no effect on the direction of Urban Gro i.e., Urban Gro and Titan International go up and down completely randomly.

Pair Corralation between Urban Gro and Titan International

Given the investment horizon of 90 days Urban Gro is expected to under-perform the Titan International. In addition to that, Urban Gro is 1.15 times more volatile than Titan International. It trades about -0.13 of its total potential returns per unit of risk. Titan International is currently generating about 0.07 per unit of volatility. If you would invest  744.00  in Titan International on December 1, 2024 and sell it today you would earn a total of  108.00  from holding Titan International or generate 14.52% return on investment over 90 days.

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

Urban Gro  vs.  Titan International

Urban Gro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Urban Gro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Titan International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Titan International are ranked lower than 5 (%) 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.

Pair Trading with Urban Gro and Titan International

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

The idea behind Urban Gro and Titan International 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.