Correlation Between Titan Machinery and Bank of New York

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

By analyzing existing cross correlation between Titan Machinery and Bank of New, you can compare the effects of market volatilities on Titan Machinery and Bank of New York 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 Bank of New York. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and Bank of New York.

Diversification Opportunities for Titan Machinery and Bank of New York

0.74

Correlation Coefficient

Titan Machinery  Bank of New York

Poor diversification

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

Pair Corralation between Titan Machinery and Bank of New York

Given the investment horizon of 90 days Titan Machinery is expected to under-perform the Bank of New York. In addition to that, Titan Machinery is 2.17 times more volatile than Bank of New. It trades about -0.31 of its total potential returns per unit of risk. Bank of New is currently generating about -0.2 per unit of volatility. If you would invest  8,122  in Bank of New on September 24, 2024 and sell it today you would lose (360.00) from holding Bank of New or give up 4.43% of portfolio value over 90 days.

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

Titan Machinery  vs.  Bank of New

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. In spite of very healthy basic indicators, Titan Machinery is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Bank of New York

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of New are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward-looking signals, Bank of New York may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Titan Machinery and Bank of New York

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

The idea behind Titan Machinery and Bank of New 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.