Correlation Between ALTRIA and Titan Machinery

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

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

Diversification Opportunities for ALTRIA and Titan Machinery

0.52

Correlation Coefficient

ALTRIA  Titan Machinery

Very weak diversification

The 3 months correlation between ALTRIA and Titan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding ALTRIA GROUP INC and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and ALTRIA 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 ALTRIA GROUP INC are associated (or correlated) with Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of ALTRIA i.e., ALTRIA and Titan Machinery go up and down completely randomly.

Pair Corralation between ALTRIA and Titan Machinery

Assuming the 90 days trading horizon ALTRIA is expected to generate 105.38 times less return on investment than Titan Machinery. But when comparing it to its historical volatility, ALTRIA GROUP INC is 2.05 times less risky than Titan Machinery. It trades about 0.0 of its potential returns per unit of risk. Titan Machinery is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,460  in Titan Machinery on October 24, 2024 and sell it today you would earn a total of  82.00  from holding Titan Machinery or generate 5.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

ALTRIA GROUP INC  vs.  Titan Machinery

ALTRIA GROUP INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALTRIA GROUP INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ALTRIA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Titan Machinery

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Titan Machinery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ALTRIA and Titan Machinery

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

The idea behind ALTRIA GROUP INC and Titan Machinery 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.