Correlation Between Titan Machinery and Arhaus

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

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

Diversification Opportunities for Titan Machinery and Arhaus

-0.31

Correlation Coefficient

Titan Machinery  Arhaus

Very good diversification

The 3 months correlation between Titan and Arhaus is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc and Titan Machinery 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 Machinery are associated (or correlated) with Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of Titan Machinery i.e., Titan Machinery and Arhaus go up and down completely randomly.

Pair Corralation between Titan Machinery and Arhaus

Given the investment horizon of 90 days Titan Machinery is expected to generate 1.71 times less return on investment than Arhaus. But when comparing it to its historical volatility, Titan Machinery is 1.59 times less risky than Arhaus. It trades about 0.14 of its potential returns per unit of risk. Arhaus Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  980.00  in Arhaus Inc on September 13, 2024 and sell it today you would earn a total of  105.00  from holding Arhaus Inc or generate 10.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Titan Machinery  vs.  Arhaus Inc

Titan Machinery

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Titan Machinery displayed solid returns over the last few months and may actually be approaching a breakup point.

Arhaus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Titan Machinery and Arhaus

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

The idea behind Titan Machinery and Arhaus 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.