Correlation Between TITAN MACHINERY and SCANSOURCE

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

By analyzing existing cross correlation between TITAN MACHINERY and SCANSOURCE, you can compare the effects of market volatilities on TITAN MACHINERY and SCANSOURCE 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 SCANSOURCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TITAN MACHINERY and SCANSOURCE.

Diversification Opportunities for TITAN MACHINERY and SCANSOURCE

0.85

Correlation Coefficient

TITAN MACHINERY  SCANSOURCE

Very poor diversification

The 3 months correlation between TITAN and SCANSOURCE is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding TITAN MACHINERY and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE 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 SCANSOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANSOURCE has no effect on the direction of TITAN MACHINERY i.e., TITAN MACHINERY and SCANSOURCE go up and down completely randomly.

Pair Corralation between TITAN MACHINERY and SCANSOURCE

Assuming the 90 days trading horizon TITAN MACHINERY is expected to generate 1.09 times less return on investment than SCANSOURCE. In addition to that, TITAN MACHINERY is 1.23 times more volatile than SCANSOURCE. It trades about 0.13 of its total potential returns per unit of risk. SCANSOURCE is currently generating about 0.18 per unit of volatility. If you would invest  2,740  in SCANSOURCE on April 22, 2025 and sell it today you would earn a total of  720.00  from holding SCANSOURCE or generate 26.28% return on investment over 90 days.

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

TITAN MACHINERY  vs.  SCANSOURCE

TITAN MACHINERY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TITAN MACHINERY are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TITAN MACHINERY exhibited solid returns over the last few months and may actually be approaching a breakup point.

SCANSOURCE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SCANSOURCE are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SCANSOURCE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TITAN MACHINERY and SCANSOURCE

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

The idea behind TITAN MACHINERY and SCANSOURCE 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.