Correlation Between Titan Company and PetIQ

Can any of the company-specific risk be diversified away by investing in both Titan Company and PetIQ 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 PetIQ 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 PetIQ Inc, you can compare the effects of market volatilities on Titan Company and PetIQ 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 PetIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Company and PetIQ.

Diversification Opportunities for Titan Company and PetIQ

-0.54

Correlation Coefficient

Titan Company  PetIQ

Excellent diversification

The 3 months correlation between Titan and PetIQ is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and PetIQ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetIQ Inc 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 PetIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetIQ Inc has no effect on the direction of Titan Company i.e., Titan Company and PetIQ go up and down completely randomly.

Pair Corralation between Titan Company and PetIQ

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the PetIQ. In addition to that, Titan Company is 18.38 times more volatile than PetIQ Inc. It trades about -0.09 of its total potential returns per unit of risk. PetIQ Inc is currently generating about 0.45 per unit of volatility. If you would invest  3,066  in PetIQ Inc on September 12, 2024 and sell it today you would earn a total of  32.00  from holding PetIQ Inc or generate 1.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	52.46%
Values	Daily Returns

Titan Company Limited  vs.  PetIQ Inc

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.

PetIQ Inc

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days PetIQ Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PetIQ is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Titan Company and PetIQ

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

The idea behind Titan Company Limited and PetIQ Inc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.