Correlation Between Titan Machinery and National Health
Can any of the company-specific risk be diversified away by investing in both Titan Machinery and National Health 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 National Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and National Health Investors, you can compare the effects of market volatilities on Titan Machinery and National Health 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 National Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and National Health.
Diversification Opportunities for Titan Machinery and National Health
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Titan and National is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and National Health Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Health Investors 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 National Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Health Investors has no effect on the direction of Titan Machinery i.e., Titan Machinery and National Health go up and down completely randomly.
Pair Corralation between Titan Machinery and National Health
Assuming the 90 days horizon Titan Machinery is expected to under-perform the National Health. In addition to that, Titan Machinery is 2.1 times more volatile than National Health Investors. It trades about -0.04 of its total potential returns per unit of risk. National Health Investors is currently generating about 0.09 per unit of volatility. If you would invest 4,525 in National Health Investors on September 12, 2024 and sell it today you would earn a total of 2,475 from holding National Health Investors or generate 54.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Titan Machinery vs. National Health Investors
Performance |
| Timeline |
| Titan Machinery |
| National Health Investors |
Titan Machinery and National Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Machinery and National Health
The main advantage of trading using opposite Titan Machinery and National Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, National Health 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 National Health will offset losses from the drop in National Health'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 |
| National Health vs. COSTCO WHOLESALE CDR | National Health vs. Titan Machinery | National Health vs. ALEFARM BREWING DK 05 | National Health vs. MARKET VECTR RETAIL |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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