Correlation Between Titan Machinery and WEC Energy
Can any of the company-specific risk be diversified away by investing in both Titan Machinery and WEC Energy 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 WEC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and WEC Energy Group, you can compare the effects of market volatilities on Titan Machinery and WEC Energy 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 WEC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and WEC Energy.
Diversification Opportunities for Titan Machinery and WEC Energy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Titan and WEC is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and WEC Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEC Energy 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 WEC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEC Energy Group has no effect on the direction of Titan Machinery i.e., Titan Machinery and WEC Energy go up and down completely randomly.
Pair Corralation between Titan Machinery and WEC Energy
Given the investment horizon of 90 days Titan Machinery is expected to under-perform the WEC Energy. In addition to that, Titan Machinery is 3.14 times more volatile than WEC Energy Group. It trades about -0.03 of its total potential returns per unit of risk. WEC Energy Group is currently generating about 0.2 per unit of volatility. If you would invest 7,973 in WEC Energy Group on September 1, 2024 and sell it today you would earn a total of 2,132 from holding WEC Energy Group or generate 26.74% 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. WEC Energy Group
Performance |
| Timeline |
| Titan Machinery |
| WEC Energy Group |
Titan Machinery and WEC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Machinery and WEC Energy
The main advantage of trading using opposite Titan Machinery and WEC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, WEC Energy 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 WEC Energy will offset losses from the drop in WEC Energy'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 |
| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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