Correlation Between Titan Machinery and Wizz Air

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

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

Diversification Opportunities for Titan Machinery and Wizz Air

0.24

Correlation Coefficient

Titan Machinery  Wizz Air

Modest diversification

The 3 months correlation between Titan and Wizz is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Wizz Air Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wizz Air Holdings 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 Wizz Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wizz Air Holdings has no effect on the direction of Titan Machinery i.e., Titan Machinery and Wizz Air go up and down completely randomly.

Pair Corralation between Titan Machinery and Wizz Air

Assuming the 90 days horizon Titan Machinery is expected to generate 3.36 times less return on investment than Wizz Air. But when comparing it to its historical volatility, Titan Machinery is 1.3 times less risky than Wizz Air. It trades about 0.02 of its potential returns per unit of risk. Wizz Air Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,562  in Wizz Air Holdings on September 23, 2024 and sell it today you would earn a total of  162.00  from holding Wizz Air Holdings or generate 10.37% return on investment over 90 days.

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

Titan Machinery  vs.  Wizz Air Holdings

Titan Machinery

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Wizz Air Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wizz Air Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wizz Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Machinery and Wizz Air

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

The idea behind Titan Machinery and Wizz Air Holdings 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.