Correlation Between BRIT AMER and Titan Machinery
Can any of the company-specific risk be diversified away by investing in both BRIT AMER and Titan Machinery 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 BRIT AMER and Titan Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIT AMER TOBACCO and Titan Machinery, you can compare the effects of market volatilities on BRIT AMER and Titan Machinery 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 BRIT AMER with a short position of Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and Titan Machinery.
Diversification Opportunities for BRIT AMER and Titan Machinery
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BRIT and Titan is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and BRIT AMER 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 BRIT AMER TOBACCO are associated (or correlated) with Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of BRIT AMER i.e., BRIT AMER and Titan Machinery go up and down completely randomly.
Pair Corralation between BRIT AMER and Titan Machinery
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 0.3 times more return on investment than Titan Machinery. However, BRIT AMER TOBACCO is 3.31 times less risky than Titan Machinery. It trades about 0.02 of its potential returns per unit of risk. Titan Machinery is currently generating about -0.15 per unit of risk. If you would invest 3,563 in BRIT AMER TOBACCO on October 12, 2024 and sell it today you would earn a total of 6.00 from holding BRIT AMER TOBACCO or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. Titan Machinery
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| Titan Machinery |
BRIT AMER and Titan Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and Titan Machinery
The main advantage of trading using opposite BRIT AMER and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER position performs unexpectedly, Titan Machinery 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 Titan Machinery will offset losses from the drop in Titan Machinery's long position.| BRIT AMER vs. TAL Education Group | BRIT AMER vs. CHINA EDUCATION GROUP | BRIT AMER vs. BII Railway Transportation | BRIT AMER vs. DEVRY EDUCATION GRP |
| Titan Machinery vs. SOFI TECHNOLOGIES | Titan Machinery vs. Carnegie Clean Energy | Titan Machinery vs. BRIT AMER TOBACCO | Titan Machinery vs. British American Tobacco |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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