Correlation Between Turning Point and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Turning Point and Coca Cola 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 Coca Cola 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 The Coca Cola, you can compare the effects of market volatilities on Turning Point and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Coca Cola.
Diversification Opportunities for Turning Point and Coca Cola
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Turning and Coca is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of Turning Point i.e., Turning Point and Coca Cola go up and down completely randomly.
Pair Corralation between Turning Point and Coca Cola
Considering the 90-day investment horizon Turning Point Brands is expected to generate 2.4 times more return on investment than Coca Cola. However, Turning Point is 2.4 times more volatile than The Coca Cola. It trades about 0.3 of its potential returns per unit of risk. The Coca Cola is currently generating about 0.09 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 Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Turning Point Brands vs. The Coca Cola
Performance |
| Timeline |
| Turning Point Brands |
| Coca Cola |
Turning Point and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Turning Point and Coca Cola
The main advantage of trading using opposite Turning Point and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola'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 |
| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. Celsius Holdings | Coca Cola vs. Coca Cola Consolidated | Coca Cola vs. Keurig Dr Pepper |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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