Correlation Between Titan Machinery and Smiths Group
Can any of the company-specific risk be diversified away by investing in both Titan Machinery and Smiths Group 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 Smiths Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and Smiths Group plc, you can compare the effects of market volatilities on Titan Machinery and Smiths Group 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 Smiths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and Smiths Group.
Diversification Opportunities for Titan Machinery and Smiths Group
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Titan and Smiths is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Smiths Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smiths Group plc 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 Smiths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smiths Group plc has no effect on the direction of Titan Machinery i.e., Titan Machinery and Smiths Group go up and down completely randomly.
Pair Corralation between Titan Machinery and Smiths Group
Assuming the 90 days horizon Titan Machinery is expected to under-perform the Smiths Group. In addition to that, Titan Machinery is 3.38 times more volatile than Smiths Group plc. It trades about -0.13 of its total potential returns per unit of risk. Smiths Group plc is currently generating about -0.01 per unit of volatility. If you would invest 2,428 in Smiths Group plc on December 4, 2024 and sell it today you would lose (6.00) from holding Smiths Group plc or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Titan Machinery vs. Smiths Group plc
Performance |
| Timeline |
| Titan Machinery |
| Smiths Group plc |
Titan Machinery and Smiths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Machinery and Smiths Group
The main advantage of trading using opposite Titan Machinery and Smiths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, Smiths Group 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 Smiths Group will offset losses from the drop in Smiths Group's long position.| Titan Machinery vs. United Rentals | Titan Machinery vs. Retail Estates NV | Titan Machinery vs. Tradegate AG Wertpapierhandelsbank | Titan Machinery vs. GOME Retail Holdings |
| Smiths Group vs. MidCap Financial Investment | Smiths Group vs. Check Point Software | Smiths Group vs. Sunny Optical Technology | Smiths Group vs. X FAB Silicon Foundries |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |