Correlation Between Timken and Mannatech Incorporated

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

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

Diversification Opportunities for Timken and Mannatech Incorporated

-0.41

Correlation Coefficient

Timken  Mannatech Incorporated

Very good diversification

The 3 months correlation between Timken and Mannatech is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Timken Company and Mannatech Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mannatech Incorporated and Timken 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 Timken Company are associated (or correlated) with Mannatech Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mannatech Incorporated has no effect on the direction of Timken i.e., Timken and Mannatech Incorporated go up and down completely randomly.

Pair Corralation between Timken and Mannatech Incorporated

Considering the 90-day investment horizon Timken is expected to generate 19.33 times less return on investment than Mannatech Incorporated. But when comparing it to its historical volatility, Timken Company is 4.96 times less risky than Mannatech Incorporated. It trades about 0.06 of its potential returns per unit of risk. Mannatech Incorporated is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  813.00  in Mannatech Incorporated on September 17, 2024 and sell it today you would earn a total of  230.00  from holding Mannatech Incorporated or generate 28.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Timken Company  vs.  Mannatech Incorporated

Timken Company

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mannatech Incorporated

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mannatech Incorporated are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Mannatech Incorporated showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Timken and Mannatech Incorporated

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

The idea behind Timken Company and Mannatech Incorporated 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.