Correlation Between TITAN MACHINERY and Meta Financial
Can any of the company-specific risk be diversified away by investing in both TITAN MACHINERY and Meta Financial 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 Meta Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TITAN MACHINERY and Meta Financial Group, you can compare the effects of market volatilities on TITAN MACHINERY and Meta Financial 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 Meta Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of TITAN MACHINERY and Meta Financial.
Diversification Opportunities for TITAN MACHINERY and Meta Financial
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TITAN and Meta is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding TITAN MACHINERY and Meta Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Financial Group 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 Meta Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Financial Group has no effect on the direction of TITAN MACHINERY i.e., TITAN MACHINERY and Meta Financial go up and down completely randomly.
Pair Corralation between TITAN MACHINERY and Meta Financial
Assuming the 90 days trading horizon TITAN MACHINERY is expected to under-perform the Meta Financial. In addition to that, TITAN MACHINERY is 1.62 times more volatile than Meta Financial Group. It trades about -0.05 of its total potential returns per unit of risk. Meta Financial Group is currently generating about 0.06 per unit of volatility. If you would invest 4,147 in Meta Financial Group on October 17, 2024 and sell it today you would earn a total of 2,853 from holding Meta Financial Group or generate 68.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
TITAN MACHINERY vs. Meta Financial Group
Performance |
| Timeline |
| TITAN MACHINERY |
| Meta Financial Group |
TITAN MACHINERY and Meta Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TITAN MACHINERY and Meta Financial
The main advantage of trading using opposite TITAN MACHINERY and Meta Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TITAN MACHINERY position performs unexpectedly, Meta Financial 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 Meta Financial will offset losses from the drop in Meta Financial's long position.| TITAN MACHINERY vs. AEON METALS LTD | TITAN MACHINERY vs. Transport International Holdings | TITAN MACHINERY vs. Osisko Metals | TITAN MACHINERY vs. Nok Airlines PCL |
| Meta Financial vs. TITAN MACHINERY | Meta Financial vs. North American Construction | Meta Financial vs. SINGAPORE AIRLINES | Meta Financial vs. Granite Construction |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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