Correlation Between Turning Point and British Amer
Can any of the company-specific risk be diversified away by investing in both Turning Point and British Amer 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 Turning Point and British Amer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Turning Point Brands and British American Tobacco, you can compare the effects of market volatilities on Turning Point and British Amer 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 Turning Point with a short position of British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and British Amer.
Diversification Opportunities for Turning Point and British Amer
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Turning and British is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and Turning Point 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 Turning Point Brands are associated (or correlated) with British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Turning Point i.e., Turning Point and British Amer go up and down completely randomly.
Pair Corralation between Turning Point and British Amer
Considering the 90-day investment horizon Turning Point Brands is expected to generate 1.62 times more return on investment than British Amer. However, Turning Point is 1.62 times more volatile than British American Tobacco. It trades about 0.21 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.08 per unit of risk. If you would invest 2,262 in Turning Point Brands on August 24, 2024 and sell it today you would earn a total of 3,952 from holding Turning Point Brands or generate 174.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Turning Point Brands vs. British American Tobacco
Performance |
| Timeline |
| Turning Point Brands |
| British American Tobacco |
Turning Point and British Amer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Turning Point and British Amer
The main advantage of trading using opposite Turning Point and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point position performs unexpectedly, British Amer 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 British Amer will offset losses from the drop in British Amer's long position.| Turning Point vs. Universal | Turning Point vs. Imperial Brands PLC | Turning Point vs. Philip Morris International | Turning Point vs. Japan Tobacco ADR |
| British Amer vs. Universal | British Amer vs. Imperial Brands PLC | British Amer vs. Philip Morris International | British Amer vs. Japan Tobacco ADR |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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