Correlation Between Titan Machinery and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both Titan Machinery and Kaiser Aluminum 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 Kaiser Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Titan Machinery and Kaiser Aluminum, you can compare the effects of market volatilities on Titan Machinery and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Machinery and Kaiser Aluminum.
Diversification Opportunities for Titan Machinery and Kaiser Aluminum
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Titan and Kaiser is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Titan Machinery and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of Titan Machinery i.e., Titan Machinery and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between Titan Machinery and Kaiser Aluminum
Assuming the 90 days horizon Titan Machinery is expected to generate 2.53 times less return on investment than Kaiser Aluminum. In addition to that, Titan Machinery is 1.25 times more volatile than Kaiser Aluminum. It trades about 0.11 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.36 per unit of volatility. If you would invest 4,875 in Kaiser Aluminum on April 23, 2025 and sell it today you would earn a total of 2,875 from holding Kaiser Aluminum or generate 58.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Titan Machinery vs. Kaiser Aluminum
Performance |
Timeline |
Titan Machinery |
Kaiser Aluminum |
Titan Machinery and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Titan Machinery and Kaiser Aluminum
The main advantage of trading using opposite Titan Machinery and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Machinery position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.Titan Machinery vs. CarsalesCom | Titan Machinery vs. Heidelberg Materials AG | Titan Machinery vs. Materialise NV | Titan Machinery vs. Compagnie Plastic Omnium |
Kaiser Aluminum vs. Collins Foods Limited | Kaiser Aluminum vs. Insurance Australia Group | Kaiser Aluminum vs. SOLSTAD OFFSHORE NK | Kaiser Aluminum vs. HANOVER INSURANCE |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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