Correlation Between Seaboard and Turning Point
Can any of the company-specific risk be diversified away by investing in both Seaboard 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 Seaboard and Turning Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seaboard and Turning Point Brands, you can compare the effects of market volatilities on Seaboard 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 Seaboard with a short position of Turning Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seaboard and Turning Point.
Diversification Opportunities for Seaboard and Turning Point
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seaboard and Turning is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Seaboard 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 Seaboard 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 Seaboard 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 Seaboard i.e., Seaboard and Turning Point go up and down completely randomly.
Pair Corralation between Seaboard and Turning Point
Considering the 90-day investment horizon Seaboard is expected to under-perform the Turning Point. But the stock apears to be less risky and, when comparing its historical volatility, Seaboard is 1.7 times less risky than Turning Point. The stock trades about -0.1 of its potential returns per unit of risk. The Turning Point Brands is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,807 in Turning Point Brands on November 1, 2024 and sell it today you would earn a total of 1,466 from holding Turning Point Brands or generate 30.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seaboard vs. Turning Point Brands
Performance |
| Timeline |
| Seaboard |
| Turning Point Brands |
Seaboard and Turning Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seaboard and Turning Point
The main advantage of trading using opposite Seaboard and Turning Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seaboard 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.| Seaboard vs. White Mountains Insurance | Seaboard vs. Cable One | Seaboard vs. NVR Inc | Seaboard vs. Alexanders |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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