Correlation Between Titan Machinery and Select Medical
Can any of the company-specific risk be diversified away by investing in both Titan Machinery and Select Medical 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 Select Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and Select Medical Holdings, you can compare the effects of market volatilities on Titan Machinery and Select Medical 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 Select Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and Select Medical.
Diversification Opportunities for Titan Machinery and Select Medical
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Titan and Select is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Select Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Medical Holdings 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 Select Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Medical Holdings has no effect on the direction of Titan Machinery i.e., Titan Machinery and Select Medical go up and down completely randomly.
Pair Corralation between Titan Machinery and Select Medical
Assuming the 90 days horizon Titan Machinery is expected to generate 0.29 times more return on investment than Select Medical. However, Titan Machinery is 3.45 times less risky than Select Medical. It trades about 0.02 of its potential returns per unit of risk. Select Medical Holdings is currently generating about -0.25 per unit of risk. If you would invest 1,440 in Titan Machinery on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Titan Machinery or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Titan Machinery vs. Select Medical Holdings
Performance |
| Timeline |
| Titan Machinery |
| Select Medical Holdings |
Titan Machinery and Select Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Machinery and Select Medical
The main advantage of trading using opposite Titan Machinery and Select Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, Select Medical 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 Select Medical will offset losses from the drop in Select Medical's long position.| Titan Machinery vs. WATSCO INC B | Titan Machinery vs. Indutrade AB | Titan Machinery vs. Superior Plus Corp | Titan Machinery vs. SIVERS SEMICONDUCTORS AB |
| Select Medical vs. Titan Machinery | Select Medical vs. SBI Insurance Group | Select Medical vs. Goosehead Insurance | Select Medical vs. DAIRY FARM INTL |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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