Correlation Between Turning Point and Century Aluminum
Can any of the company-specific risk be diversified away by investing in both Turning Point and Century Aluminum 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 Century Aluminum 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 Century Aluminum, you can compare the effects of market volatilities on Turning Point and Century Aluminum 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 Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Century Aluminum.
Diversification Opportunities for Turning Point and Century Aluminum
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Turning and Century is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum 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 Century Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Aluminum has no effect on the direction of Turning Point i.e., Turning Point and Century Aluminum go up and down completely randomly.
Pair Corralation between Turning Point and Century Aluminum
Considering the 90-day investment horizon Turning Point Brands is expected to generate 0.72 times more return on investment than Century Aluminum. However, Turning Point Brands is 1.39 times less risky than Century Aluminum. It trades about 0.3 of its potential returns per unit of risk. Century Aluminum is currently generating about 0.02 per unit of risk. If you would invest 5,500 in Turning Point Brands on September 13, 2024 and sell it today you would earn a total of 784.00 from holding Turning Point Brands or generate 14.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Turning Point Brands vs. Century Aluminum
Performance |
| Timeline |
| Turning Point Brands |
| Century Aluminum |
Turning Point and Century Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Turning Point and Century Aluminum
The main advantage of trading using opposite Turning Point and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point position performs unexpectedly, Century Aluminum 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 Century Aluminum will offset losses from the drop in Century Aluminum'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 |
| Century Aluminum vs. Fortitude Gold Corp | Century Aluminum vs. New Gold | Century Aluminum vs. Galiano Gold | Century Aluminum vs. GoldMining |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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