Correlation Between Titan Company and Freddie Mac

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

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

Diversification Opportunities for Titan Company and Freddie Mac

-0.68

Correlation Coefficient

Titan Company  Freddie Mac

Excellent diversification

The 3 months correlation between Titan and Freddie is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Freddie Mac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freddie Mac and Titan Company 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 Company Limited are associated (or correlated) with Freddie Mac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freddie Mac has no effect on the direction of Titan Company i.e., Titan Company and Freddie Mac go up and down completely randomly.

Pair Corralation between Titan Company and Freddie Mac

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Freddie Mac. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 5.35 times less risky than Freddie Mac. The stock trades about -0.12 of its potential returns per unit of risk. The Freddie Mac is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  113.00  in Freddie Mac on September 3, 2024 and sell it today you would earn a total of  195.00  from holding Freddie Mac or generate 172.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.38%
Values	Daily Returns

Titan Company Limited  vs.  Freddie Mac

Titan Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan Company Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Freddie Mac

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freddie Mac are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Freddie Mac unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Company and Freddie Mac

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

The idea behind Titan Company Limited and Freddie Mac 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 Anywhere module to track or share privately all of your investments from the convenience of any device.