Correlation Between Titan Machinery and WW Grainger
Can any of the company-specific risk be diversified away by investing in both Titan Machinery and WW Grainger 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 WW Grainger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and WW Grainger, you can compare the effects of market volatilities on Titan Machinery and WW Grainger 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 WW Grainger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and WW Grainger.
Diversification Opportunities for Titan Machinery and WW Grainger
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Titan and GWW is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger 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 WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of Titan Machinery i.e., Titan Machinery and WW Grainger go up and down completely randomly.
Pair Corralation between Titan Machinery and WW Grainger
Given the investment horizon of 90 days Titan Machinery is expected to generate 1.69 times more return on investment than WW Grainger. However, Titan Machinery is 1.69 times more volatile than WW Grainger. It trades about -0.03 of its potential returns per unit of risk. WW Grainger is currently generating about -0.29 per unit of risk. If you would invest 2,338 in Titan Machinery on January 24, 2024 and sell it today you would lose (37.00) from holding Titan Machinery or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Titan Machinery vs. WW Grainger
Performance |
| Timeline |
| Titan Machinery |
| WW Grainger |
Titan Machinery and WW Grainger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Titan Machinery and WW Grainger
The main advantage of trading using opposite Titan Machinery and WW Grainger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, WW Grainger 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 WW Grainger will offset losses from the drop in WW Grainger'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 |
| WW Grainger vs. Watsco Inc | WW Grainger vs. Pool Corporation | WW Grainger vs. MSC Industrial Direct | WW Grainger vs. Applied Industrial Technologies |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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