Correlation Between Titan International and Stepan
Can any of the company-specific risk be diversified away by investing in both Titan International and Stepan 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 International and Stepan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan International and Stepan Company, you can compare the effects of market volatilities on Titan International and Stepan 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 International with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan International and Stepan.
Diversification Opportunities for Titan International and Stepan
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Titan and Stepan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Titan International and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Titan International 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 International are associated (or correlated) with Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Titan International i.e., Titan International and Stepan go up and down completely randomly.
Pair Corralation between Titan International and Stepan
Considering the 90-day investment horizon Titan International is expected to under-perform the Stepan. In addition to that, Titan International is 1.5 times more volatile than Stepan Company. It trades about -0.06 of its total potential returns per unit of risk. Stepan Company is currently generating about 0.04 per unit of volatility. If you would invest 6,665 in Stepan Company on September 4, 2024 and sell it today you would earn a total of 1,037 from holding Stepan Company or generate 15.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Titan International vs. Stepan Company
Performance |
| Timeline |
| Titan International |
| Stepan Company |
Titan International and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan International and Stepan
The main advantage of trading using opposite Titan International and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan International position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Titan International vs. Shyft Group | Titan International vs. Manitowoc | Titan International vs. Oshkosh | Titan International vs. Terex |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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