Correlation Between Titan Machinery and ChampionX
Can any of the company-specific risk be diversified away by investing in both Titan Machinery and ChampionX 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 ChampionX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and ChampionX, you can compare the effects of market volatilities on Titan Machinery and ChampionX 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 ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and ChampionX.
Diversification Opportunities for Titan Machinery and ChampionX
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Titan and ChampionX is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX 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 ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of Titan Machinery i.e., Titan Machinery and ChampionX go up and down completely randomly.
Pair Corralation between Titan Machinery and ChampionX
Given the investment horizon of 90 days Titan Machinery is expected to generate 1.62 times more return on investment than ChampionX. However, Titan Machinery is 1.62 times more volatile than ChampionX. It trades about 0.12 of its potential returns per unit of risk. ChampionX is currently generating about -0.36 per unit of risk. If you would invest 1,400 in Titan Machinery on September 20, 2024 and sell it today you would earn a total of 74.00 from holding Titan Machinery or generate 5.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Titan Machinery vs. ChampionX
Performance |
Timeline |
Titan Machinery |
ChampionX |
Titan Machinery and ChampionX Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Titan Machinery and ChampionX
The main advantage of trading using opposite Titan Machinery and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, ChampionX 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 ChampionX will offset losses from the drop in ChampionX's long position.Titan Machinery vs. DXP Enterprises | Titan Machinery vs. Watsco Inc | Titan Machinery vs. Distribution Solutions Group | Titan Machinery vs. SiteOne Landscape Supply |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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