Correlation Between HE Equipment and Turning Point
Can any of the company-specific risk be diversified away by investing in both HE Equipment and Turning Point 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 HE Equipment and Turning Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and Turning Point Brands, you can compare the effects of market volatilities on HE Equipment and Turning Point 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 HE Equipment with a short position of Turning Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Turning Point.
Diversification Opportunities for HE Equipment and Turning Point
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HEES and Turning is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and Turning Point Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turning Point Brands and HE Equipment 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 HE Equipment Services are associated (or correlated) with Turning Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turning Point Brands has no effect on the direction of HE Equipment i.e., HE Equipment and Turning Point go up and down completely randomly.
Pair Corralation between HE Equipment and Turning Point
Given the investment horizon of 90 days HE Equipment is expected to generate 2.26 times less return on investment than Turning Point. In addition to that, HE Equipment is 1.4 times more volatile than Turning Point Brands. It trades about 0.17 of its total potential returns per unit of risk. Turning Point Brands is currently generating about 0.55 per unit of volatility. If you would invest 4,663 in Turning Point Brands on August 31, 2024 and sell it today you would earn a total of 1,478 from holding Turning Point Brands or generate 31.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. Turning Point Brands
Performance |
| Timeline |
| HE Equipment Services |
| Turning Point Brands |
HE Equipment and Turning Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and Turning Point
The main advantage of trading using opposite HE Equipment and Turning Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment position performs unexpectedly, Turning Point 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 Turning Point will offset losses from the drop in Turning Point's long position.| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
| Turning Point vs. Universal | Turning Point vs. Imperial Brands PLC | Turning Point vs. British American Tobacco | Turning Point vs. Philip Morris International |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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