Correlation Between Titan Company and Midcap Growth

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

Diversification Opportunities for Titan Company and Midcap Growth

-0.74

Correlation Coefficient

Titan Company  Midcap Growth

Pay attention - limited upside

The 3 months correlation between Titan and Midcap is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Midcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Growth 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 Midcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Growth has no effect on the direction of Titan Company i.e., Titan Company and Midcap Growth go up and down completely randomly.

Pair Corralation between Titan Company and Midcap Growth

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Midcap Growth. In addition to that, Titan Company is 1.39 times more volatile than Midcap Growth Fund. It trades about -0.1 of its total potential returns per unit of risk. Midcap Growth Fund is currently generating about 0.4 per unit of volatility. If you would invest  954.00  in Midcap Growth Fund on September 4, 2024 and sell it today you would earn a total of  248.00  from holding Midcap Growth Fund or generate 26.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Titan Company Limited  vs.  Midcap Growth Fund

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 uncertain 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.

Midcap Growth

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Midcap Growth Fund are ranked lower than 31 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Midcap Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Titan Company and Midcap Growth

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

The idea behind Titan Company Limited and Midcap Growth Fund 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.