Correlation Between Turning Point and Freshpet
Can any of the company-specific risk be diversified away by investing in both Turning Point and Freshpet 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 Freshpet 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 Freshpet, you can compare the effects of market volatilities on Turning Point and Freshpet 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 Freshpet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Freshpet.
Diversification Opportunities for Turning Point and Freshpet
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Turning and Freshpet is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Freshpet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freshpet 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 Freshpet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freshpet has no effect on the direction of Turning Point i.e., Turning Point and Freshpet go up and down completely randomly.
Pair Corralation between Turning Point and Freshpet
Considering the 90-day investment horizon Turning Point Brands is expected to generate 0.74 times more return on investment than Freshpet. However, Turning Point Brands is 1.34 times less risky than Freshpet. It trades about 0.56 of its potential returns per unit of risk. Freshpet is currently generating about 0.23 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Turning Point Brands vs. Freshpet
Performance |
| Timeline |
| Turning Point Brands |
| Freshpet |
Turning Point and Freshpet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Turning Point and Freshpet
The main advantage of trading using opposite Turning Point and Freshpet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point position performs unexpectedly, Freshpet 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 Freshpet will offset losses from the drop in Freshpet'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 |
| Freshpet vs. Post Holdings | Freshpet vs. Simply Good Foods | Freshpet vs. Treehouse Foods | Freshpet vs. J J Snack |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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