Correlation Between Timken and Mach Natural
Can any of the company-specific risk be diversified away by investing in both Timken and Mach Natural 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 Timken and Mach Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timken Company and Mach Natural Resources, you can compare the effects of market volatilities on Timken and Mach Natural 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 Timken with a short position of Mach Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timken and Mach Natural.
Diversification Opportunities for Timken and Mach Natural
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Timken and Mach is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Timken Company and Mach Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mach Natural Resources and Timken 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 Timken Company are associated (or correlated) with Mach Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mach Natural Resources has no effect on the direction of Timken i.e., Timken and Mach Natural go up and down completely randomly.
Pair Corralation between Timken and Mach Natural
Considering the 90-day investment horizon Timken Company is expected to under-perform the Mach Natural. In addition to that, Timken is 2.57 times more volatile than Mach Natural Resources. It trades about -0.09 of its total potential returns per unit of risk. Mach Natural Resources is currently generating about -0.03 per unit of volatility. If you would invest 1,565 in Mach Natural Resources on August 31, 2024 and sell it today you would lose (19.00) from holding Mach Natural Resources or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timken Company vs. Mach Natural Resources
Performance |
| Timeline |
| Timken Company |
| Mach Natural Resources |
Timken and Mach Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timken and Mach Natural
The main advantage of trading using opposite Timken and Mach Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timken position performs unexpectedly, Mach Natural 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 Mach Natural will offset losses from the drop in Mach Natural's long position.| Timken vs. AMCON Distributing | Timken vs. Espey Mfg Electronics | Timken vs. Servotronics | Timken vs. CompX International |
| Mach Natural vs. Compania Cervecerias Unidas | Mach Natural vs. Texas Roadhouse | Mach Natural vs. RLX Technology | Mach Natural vs. BJs Restaurants |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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