Correlation Between Titan Machinery and Air Lease
Can any of the company-specific risk be diversified away by investing in both Titan Machinery and Air Lease 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 Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and Air Lease, you can compare the effects of market volatilities on Titan Machinery and Air Lease 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 Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and Air Lease.
Diversification Opportunities for Titan Machinery and Air Lease
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Titan and Air is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease 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 Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Titan Machinery i.e., Titan Machinery and Air Lease go up and down completely randomly.
Pair Corralation between Titan Machinery and Air Lease
Given the investment horizon of 90 days Titan Machinery is expected to under-perform the Air Lease. In addition to that, Titan Machinery is 1.46 times more volatile than Air Lease. It trades about -0.06 of its total potential returns per unit of risk. Air Lease is currently generating about 0.07 per unit of volatility. If you would invest 3,860 in Air Lease on September 2, 2024 and sell it today you would earn a total of 1,230 from holding Air Lease or generate 31.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Titan Machinery vs. Air Lease
Performance |
| Timeline |
| Titan Machinery |
| Air Lease |
Titan Machinery and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Machinery and Air Lease
The main advantage of trading using opposite Titan Machinery and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| Titan Machinery vs. Oil States International | Titan Machinery vs. Oceaneering International | Titan Machinery vs. Geospace Technologies | Titan Machinery vs. Newpark Resources |
| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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