Correlation Between MSC Industrial and Titan Machinery
Can any of the company-specific risk be diversified away by investing in both MSC Industrial 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 MSC Industrial and Titan Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSC Industrial Direct and Titan Machinery, you can compare the effects of market volatilities on MSC Industrial 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 MSC Industrial with a short position of Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSC Industrial and Titan Machinery.
Diversification Opportunities for MSC Industrial and Titan Machinery
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MSC and Titan is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding MSC Industrial Direct and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and MSC Industrial 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 MSC Industrial Direct 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 MSC Industrial i.e., MSC Industrial and Titan Machinery go up and down completely randomly.
Pair Corralation between MSC Industrial and Titan Machinery
Considering the 90-day investment horizon MSC Industrial Direct is expected to generate 0.51 times more return on investment than Titan Machinery. However, MSC Industrial Direct is 1.95 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 -0.05 per unit of risk. If you would invest 7,773 in MSC Industrial Direct on August 27, 2024 and sell it today you would earn a total of 768.00 from holding MSC Industrial Direct or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSC Industrial Direct vs. Titan Machinery
Performance |
| Timeline |
| MSC Industrial Direct |
| Titan Machinery |
MSC Industrial and Titan Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSC Industrial and Titan Machinery
The main advantage of trading using opposite MSC Industrial and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSC Industrial 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.| MSC Industrial vs. DXP Enterprises | MSC Industrial vs. Core Main | MSC Industrial vs. WW Grainger | MSC Industrial vs. SiteOne Landscape Supply |
| Titan Machinery vs. Global Industrial Co | Titan Machinery vs. BlueLinx Holdings | Titan Machinery vs. WESCO International | Titan Machinery vs. MSC Industrial Direct |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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