Correlation Between Global Ship and Titan Machinery
Can any of the company-specific risk be diversified away by investing in both Global Ship 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 Global Ship and Titan Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and Titan Machinery, you can compare the effects of market volatilities on Global Ship 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 Global Ship with a short position of Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Titan Machinery.
Diversification Opportunities for Global Ship and Titan Machinery
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Titan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and Titan Machinery go up and down completely randomly.
Pair Corralation between Global Ship and Titan Machinery
Assuming the 90 days trading horizon Global Ship Lease is expected to generate 0.33 times more return on investment than Titan Machinery. However, Global Ship Lease is 3.02 times less risky than Titan Machinery. It trades about 0.05 of its potential returns per unit of risk. Titan Machinery is currently generating about -0.05 per unit of risk. If you would invest 2,260 in Global Ship Lease on August 31, 2024 and sell it today you would earn a total of 376.00 from holding Global Ship Lease or generate 16.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Titan Machinery
Performance |
| Timeline |
| Global Ship Lease |
| Titan Machinery |
Global Ship and Titan Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Titan Machinery
The main advantage of trading using opposite Global Ship and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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.The idea behind Global Ship Lease and Titan Machinery pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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