Correlation Between Boston Properties and Titan Machinery

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

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

Diversification Opportunities for Boston Properties and Titan Machinery

0.27

Correlation Coefficient

Boston Properties  Titan Machinery

Modest diversification

The 3 months correlation between Boston and Titan is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Boston Properties and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and Boston Properties 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 Boston Properties are associated (or correlated) with Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of Boston Properties i.e., Boston Properties and Titan Machinery go up and down completely randomly.

Pair Corralation between Boston Properties and Titan Machinery

Considering the 90-day investment horizon Boston Properties is expected to under-perform the Titan Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Boston Properties is 1.66 times less risky than Titan Machinery. The stock trades about -0.06 of its potential returns per unit of risk. The Titan Machinery is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,393  in Titan Machinery on September 29, 2024 and sell it today you would earn a total of  20.00  from holding Titan Machinery or generate 1.44% return on investment over 90 days.

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

Boston Properties  vs.  Titan Machinery

Boston Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

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. In spite of very healthy basic indicators, Titan Machinery is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Boston Properties and Titan Machinery

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

The idea behind Boston Properties and Titan Machinery 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.