Correlation Between Titan Machinery and NiSource
Can any of the company-specific risk be diversified away by investing in both Titan Machinery and NiSource 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 NiSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and NiSource, you can compare the effects of market volatilities on Titan Machinery and NiSource 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 NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and NiSource.
Diversification Opportunities for Titan Machinery and NiSource
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Titan and NiSource is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource 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 NiSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource has no effect on the direction of Titan Machinery i.e., Titan Machinery and NiSource go up and down completely randomly.
Pair Corralation between Titan Machinery and NiSource
Given the investment horizon of 90 days Titan Machinery is expected to under-perform the NiSource. In addition to that, Titan Machinery is 3.31 times more volatile than NiSource. It trades about -0.03 of its total potential returns per unit of risk. NiSource is currently generating about 0.27 per unit of volatility. If you would invest 2,815 in NiSource on September 1, 2024 and sell it today you would earn a total of 994.00 from holding NiSource or generate 35.31% 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. NiSource
Performance |
| Timeline |
| Titan Machinery |
| NiSource |
Titan Machinery and NiSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Machinery and NiSource
The main advantage of trading using opposite Titan Machinery and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, NiSource 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 NiSource will offset losses from the drop in NiSource'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 |
| NiSource vs. NorthWestern | NiSource vs. Avista | NiSource vs. Otter Tail | NiSource vs. Companhia Paranaense de |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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