Correlation Between GMS and Titan Machinery
Can any of the company-specific risk be diversified away by investing in both GMS 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 GMS and Titan Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Titan Machinery, you can compare the effects of market volatilities on GMS 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 GMS with a short position of Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Titan Machinery.
Diversification Opportunities for GMS and Titan Machinery
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GMS and Titan is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and GMS 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 GMS Inc 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 GMS i.e., GMS and Titan Machinery go up and down completely randomly.
Pair Corralation between GMS and Titan Machinery
Considering the 90-day investment horizon GMS Inc is expected to generate 0.65 times more return on investment than Titan Machinery. However, GMS Inc is 1.54 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 -0.07 per unit of risk. If you would invest 9,649 in GMS Inc on September 3, 2024 and sell it today you would earn a total of 386.00 from holding GMS Inc or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMS Inc vs. Titan Machinery
Performance |
| Timeline |
| GMS Inc |
| Titan Machinery |
GMS and Titan Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Titan Machinery
The main advantage of trading using opposite GMS and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS 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.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
| Titan Machinery vs. DXP Enterprises | Titan Machinery vs. Watsco Inc | Titan Machinery vs. Distribution Solutions Group | Titan Machinery vs. SiteOne Landscape Supply |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |