Correlation Between Titan Machinery and PPG Industries
Can any of the company-specific risk be diversified away by investing in both Titan Machinery and PPG Industries 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 PPG Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and PPG Industries, you can compare the effects of market volatilities on Titan Machinery and PPG Industries 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 PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and PPG Industries.
Diversification Opportunities for Titan Machinery and PPG Industries
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Titan and PPG is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries 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 PPG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG Industries has no effect on the direction of Titan Machinery i.e., Titan Machinery and PPG Industries go up and down completely randomly.
Pair Corralation between Titan Machinery and PPG Industries
Assuming the 90 days horizon Titan Machinery is expected to generate 3.17 times more return on investment than PPG Industries. However, Titan Machinery is 3.17 times more volatile than PPG Industries. It trades about 0.22 of its potential returns per unit of risk. PPG Industries is currently generating about 0.05 per unit of risk. If you would invest 1,280 in Titan Machinery on August 31, 2024 and sell it today you would earn a total of 240.00 from holding Titan Machinery or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Titan Machinery vs. PPG Industries
Performance |
| Timeline |
| Titan Machinery |
| PPG Industries |
Titan Machinery and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Machinery and PPG Industries
The main advantage of trading using opposite Titan Machinery and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, PPG Industries 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 PPG Industries will offset losses from the drop in PPG Industries' long position.| Titan Machinery vs. WATSCO INC B | Titan Machinery vs. Indutrade AB | Titan Machinery vs. Superior Plus Corp | Titan Machinery vs. NMI Holdings |
| PPG Industries vs. PRECISION DRILLING P | PPG Industries vs. Apollo Investment Corp | PPG Industries vs. AWILCO DRILLING PLC | PPG Industries vs. SLR Investment Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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