Correlation Between Titan Machinery and Stepstone
Can any of the company-specific risk be diversified away by investing in both Titan Machinery and Stepstone 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 Stepstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and Stepstone Group, you can compare the effects of market volatilities on Titan Machinery and Stepstone 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 Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and Stepstone.
Diversification Opportunities for Titan Machinery and Stepstone
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Titan and Stepstone is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone Group 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 Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Titan Machinery i.e., Titan Machinery and Stepstone go up and down completely randomly.
Pair Corralation between Titan Machinery and Stepstone
Given the investment horizon of 90 days Titan Machinery is expected to under-perform the Stepstone. In addition to that, Titan Machinery is 1.27 times more volatile than Stepstone Group. It trades about -0.06 of its total potential returns per unit of risk. Stepstone Group is currently generating about 0.17 per unit of volatility. If you would invest 2,562 in Stepstone Group on September 4, 2024 and sell it today you would earn a total of 3,723 from holding Stepstone Group or generate 145.32% 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. Stepstone Group
Performance |
| Timeline |
| Titan Machinery |
| Stepstone Group |
Titan Machinery and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Machinery and Stepstone
The main advantage of trading using opposite Titan Machinery and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, Stepstone 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 Stepstone will offset losses from the drop in Stepstone's long position.| Titan Machinery vs. Global Industrial Co | Titan Machinery vs. Ferguson Plc | Titan Machinery vs. MSC Industrial Direct |
| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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