Correlation Between Cedar Fair and Titan Machinery

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

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

Diversification Opportunities for Cedar Fair and Titan Machinery

0.34

Correlation Coefficient

Cedar Fair  Titan Machinery

Weak diversification

The 3 months correlation between Cedar and Titan is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Fair LP and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery and Cedar Fair 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 Cedar Fair LP are associated (or correlated) with Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of Cedar Fair i.e., Cedar Fair and Titan Machinery go up and down completely randomly.

Pair Corralation between Cedar Fair and Titan Machinery

Considering the 90-day investment horizon Cedar Fair LP is expected to generate 0.79 times more return on investment than Titan Machinery. However, Cedar Fair LP is 1.26 times less risky than Titan Machinery. It trades about 0.1 of its potential returns per unit of risk. Titan Machinery is currently generating about -0.06 per unit of risk. If you would invest  3,952  in Cedar Fair LP on February 21, 2024 and sell it today you would earn a total of  398.00  from holding Cedar Fair LP or generate 10.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Cedar Fair LP  vs.  Titan Machinery

Cedar Fair LP

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Fair LP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Cedar Fair may actually be approaching a critical reversion point that can send shares even higher in June 2024.

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 latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cedar Fair and Titan Machinery

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

The idea behind Cedar Fair LP and Titan Machinery 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .