Correlation Between Turning Point and Japan Tobacco
Can any of the company-specific risk be diversified away by investing in both Turning Point and Japan Tobacco 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 Japan Tobacco 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 Japan Tobacco, you can compare the effects of market volatilities on Turning Point and Japan Tobacco 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 Japan Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Japan Tobacco.
Diversification Opportunities for Turning Point and Japan Tobacco
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Turning and Japan is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Japan Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan 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 Japan Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Tobacco has no effect on the direction of Turning Point i.e., Turning Point and Japan Tobacco go up and down completely randomly.
Pair Corralation between Turning Point and Japan Tobacco
Considering the 90-day investment horizon Turning Point Brands is expected to generate 0.72 times more return on investment than Japan Tobacco. However, Turning Point Brands is 1.38 times less risky than Japan Tobacco. It trades about 0.56 of its potential returns per unit of risk. Japan Tobacco is currently generating about 0.17 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. Japan Tobacco
Performance |
| Timeline |
| Turning Point Brands |
| Japan Tobacco |
Turning Point and Japan Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Turning Point and Japan Tobacco
The main advantage of trading using opposite Turning Point and Japan Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point position performs unexpectedly, Japan Tobacco 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 Japan Tobacco will offset losses from the drop in Japan Tobacco'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 |
| Japan Tobacco vs. Imperial Brands PLC | Japan Tobacco vs. RLX Technology | Japan Tobacco vs. British American Tobacco | Japan Tobacco vs. Turning Point Brands |
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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