Correlation Between Titan Machinery and HYDROFARM HLD
Can any of the company-specific risk be diversified away by investing in both Titan Machinery and HYDROFARM HLD 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 HYDROFARM HLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and HYDROFARM HLD GRP, you can compare the effects of market volatilities on Titan Machinery and HYDROFARM HLD 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 HYDROFARM HLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and HYDROFARM HLD.
Diversification Opportunities for Titan Machinery and HYDROFARM HLD
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Titan and HYDROFARM is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and HYDROFARM HLD GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYDROFARM HLD GRP 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 HYDROFARM HLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYDROFARM HLD GRP has no effect on the direction of Titan Machinery i.e., Titan Machinery and HYDROFARM HLD go up and down completely randomly.
Pair Corralation between Titan Machinery and HYDROFARM HLD
Assuming the 90 days horizon Titan Machinery is expected to generate 1.31 times less return on investment than HYDROFARM HLD. But when comparing it to its historical volatility, Titan Machinery is 1.66 times less risky than HYDROFARM HLD. It trades about 0.22 of its potential returns per unit of risk. HYDROFARM HLD GRP is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 62.00 in HYDROFARM HLD GRP on August 31, 2024 and sell it today you would earn a total of 14.00 from holding HYDROFARM HLD GRP or generate 22.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Titan Machinery vs. HYDROFARM HLD GRP
Performance |
| Timeline |
| Titan Machinery |
| HYDROFARM HLD GRP |
Titan Machinery and HYDROFARM HLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Machinery and HYDROFARM HLD
The main advantage of trading using opposite Titan Machinery and HYDROFARM HLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, HYDROFARM HLD 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 HYDROFARM HLD will offset losses from the drop in HYDROFARM HLD's long position.| Titan Machinery vs. WATSCO INC B | Titan Machinery vs. Indutrade AB | Titan Machinery vs. Superior Plus Corp | Titan Machinery vs. NMI Holdings |
| HYDROFARM HLD vs. Sunstone Hotel Investors | HYDROFARM HLD vs. Wyndham Hotels Resorts | HYDROFARM HLD vs. Playa Hotels Resorts | HYDROFARM HLD vs. DALATA HOTEL |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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