Correlation Between ValOre Metals and Titan Machinery

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

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

Diversification Opportunities for ValOre Metals and Titan Machinery

0.13

Correlation Coefficient

ValOre Metals  Titan Machinery

Average diversification

The 3 months correlation between ValOre and Titan is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding ValOre Metals Corp and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and ValOre Metals 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 ValOre Metals Corp 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 ValOre Metals i.e., ValOre Metals and Titan Machinery go up and down completely randomly.

Pair Corralation between ValOre Metals and Titan Machinery

Assuming the 90 days trading horizon ValOre Metals Corp is expected to generate 4.77 times more return on investment than Titan Machinery. However, ValOre Metals is 4.77 times more volatile than Titan Machinery. It trades about 0.09 of its potential returns per unit of risk. Titan Machinery is currently generating about 0.01 per unit of risk. If you would invest  3.85  in ValOre Metals Corp on September 29, 2024 and sell it today you would earn a total of  1.00  from holding ValOre Metals Corp or generate 25.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

ValOre Metals Corp  vs.  Titan Machinery

ValOre Metals Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ValOre Metals Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ValOre Metals reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with ValOre Metals and Titan Machinery

The main advantage of trading using opposite ValOre Metals and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ValOre Metals 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 ValOre Metals Corp 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.