Correlation Between Titan Machinery and NTG Nordic

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Can any of the company-specific risk be diversified away by investing in both Titan Machinery and NTG Nordic 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 NTG Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and NTG Nordic Transport, you can compare the effects of market volatilities on Titan Machinery and NTG Nordic 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 NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and NTG Nordic.

Diversification Opportunities for Titan Machinery and NTG Nordic

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Titan and NTG is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport 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 NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Titan Machinery i.e., Titan Machinery and NTG Nordic go up and down completely randomly.

Pair Corralation between Titan Machinery and NTG Nordic

Assuming the 90 days horizon Titan Machinery is expected to under-perform the NTG Nordic. In addition to that, Titan Machinery is 2.02 times more volatile than NTG Nordic Transport. It trades about -0.05 of its total potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.02 per unit of volatility. If you would invest  3,795  in NTG Nordic Transport on September 24, 2024 and sell it today you would lose (355.00) from holding NTG Nordic Transport or give up 9.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Titan Machinery  vs.  NTG Nordic Transport

 Performance 
       Timeline  
Titan Machinery 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Weak
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. Despite nearly fragile basic indicators, Titan Machinery may actually be approaching a critical reversion point that can send shares even higher in January 2025.
NTG Nordic Transport 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Titan Machinery and NTG Nordic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Titan Machinery and NTG Nordic

The main advantage of trading using opposite Titan Machinery and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, NTG Nordic 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 NTG Nordic will offset losses from the drop in NTG Nordic's long position.
The idea behind Titan Machinery and NTG Nordic Transport 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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