Correlation Between Turning Point and Better Choice
Can any of the company-specific risk be diversified away by investing in both Turning Point and Better Choice 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 Better Choice 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 Better Choice, you can compare the effects of market volatilities on Turning Point and Better Choice 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 Better Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Better Choice.
Diversification Opportunities for Turning Point and Better Choice
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Turning and Better is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Better Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Choice 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 Better Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Choice has no effect on the direction of Turning Point i.e., Turning Point and Better Choice go up and down completely randomly.
Pair Corralation between Turning Point and Better Choice
Considering the 90-day investment horizon Turning Point Brands is expected to generate 0.43 times more return on investment than Better Choice. However, Turning Point Brands is 2.35 times less risky than Better Choice. It trades about 0.56 of its potential returns per unit of risk. Better Choice is currently generating about 0.1 per unit of risk. If you would invest 4,673 in Turning Point Brands on August 28, 2024 and sell it today you would earn a total of 1,438 from holding Turning Point Brands or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Turning Point Brands vs. Better Choice
Performance |
| Timeline |
| Turning Point Brands |
| Better Choice |
Turning Point and Better Choice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Turning Point and Better Choice
The main advantage of trading using opposite Turning Point and Better Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point position performs unexpectedly, Better Choice 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 Better Choice will offset losses from the drop in Better Choice's long position.| Turning Point vs. Universal | Turning Point vs. Imperial Brands PLC | Turning Point vs. British American Tobacco | Turning Point vs. Philip Morris International |
| Better Choice vs. Blue Star Foods | Better Choice vs. Stryve Foods | Better Choice vs. BioAdaptives | Better Choice vs. Beyond Oil |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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