Correlation Between Titan Machinery and STEEL DYNAMICS
Can any of the company-specific risk be diversified away by investing in both Titan Machinery and STEEL DYNAMICS 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 STEEL DYNAMICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and STEEL DYNAMICS, you can compare the effects of market volatilities on Titan Machinery and STEEL DYNAMICS 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 STEEL DYNAMICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and STEEL DYNAMICS.
Diversification Opportunities for Titan Machinery and STEEL DYNAMICS
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Titan and STEEL is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and STEEL DYNAMICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL DYNAMICS 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 STEEL DYNAMICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEEL DYNAMICS has no effect on the direction of Titan Machinery i.e., Titan Machinery and STEEL DYNAMICS go up and down completely randomly.
Pair Corralation between Titan Machinery and STEEL DYNAMICS
Assuming the 90 days horizon Titan Machinery is expected to generate 1.46 times more return on investment than STEEL DYNAMICS. However, Titan Machinery is 1.46 times more volatile than STEEL DYNAMICS. It trades about -0.17 of its potential returns per unit of risk. STEEL DYNAMICS is currently generating about -0.28 per unit of risk. If you would invest 1,450 in Titan Machinery on October 11, 2024 and sell it today you would lose (120.00) from holding Titan Machinery or give up 8.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Titan Machinery vs. STEEL DYNAMICS
Performance |
| Timeline |
| Titan Machinery |
| STEEL DYNAMICS |
Titan Machinery and STEEL DYNAMICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Machinery and STEEL DYNAMICS
The main advantage of trading using opposite Titan Machinery and STEEL DYNAMICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, STEEL DYNAMICS 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 STEEL DYNAMICS will offset losses from the drop in STEEL DYNAMICS's long position.| Titan Machinery vs. SOFI TECHNOLOGIES | Titan Machinery vs. Carnegie Clean Energy | Titan Machinery vs. BRIT AMER TOBACCO | Titan Machinery vs. British American Tobacco |
| STEEL DYNAMICS vs. China Resources Beer | STEEL DYNAMICS vs. Titan Machinery | STEEL DYNAMICS vs. FARM 51 GROUP | STEEL DYNAMICS vs. Federal Agricultural Mortgage |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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