Correlation Between Titan Machinery and Boston Beer

Can any of the company-specific risk be diversified away by investing in both Titan Machinery and Boston Beer 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 Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Titan Machinery and The Boston Beer, you can compare the effects of market volatilities on Titan Machinery and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and Boston Beer.

Diversification Opportunities for Titan Machinery and Boston Beer

0.81

Correlation Coefficient

Titan Machinery  Boston Beer

Very poor diversification

The 3 months correlation between Titan and Boston is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Titan Machinery i.e., Titan Machinery and Boston Beer go up and down completely randomly.

Pair Corralation between Titan Machinery and Boston Beer

Assuming the 90 days horizon Titan Machinery is expected to generate 5.63 times less return on investment than Boston Beer. In addition to that, Titan Machinery is 1.86 times more volatile than The Boston Beer. It trades about 0.01 of its total potential returns per unit of risk. The Boston Beer is currently generating about 0.1 per unit of volatility. If you would invest  25,840  in The Boston Beer on September 29, 2024 and sell it today you would earn a total of  2,460  from holding The Boston Beer or generate 9.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Titan Machinery  vs.  The Boston Beer

Titan Machinery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan Machinery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Titan Machinery is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Boston Beer

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Boston Beer are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Titan Machinery and Boston Beer

The main advantage of trading using opposite Titan Machinery and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.

The idea behind Titan Machinery and The Boston Beer pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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..