Correlation Between Turning Point and Joint Stock
Can any of the company-specific risk be diversified away by investing in both Turning Point and Joint Stock 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 Joint Stock 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 Joint Stock, you can compare the effects of market volatilities on Turning Point and Joint Stock 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 Joint Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Joint Stock.
Diversification Opportunities for Turning Point and Joint Stock
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Turning and Joint is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock 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 Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of Turning Point i.e., Turning Point and Joint Stock go up and down completely randomly.
Pair Corralation between Turning Point and Joint Stock
Considering the 90-day investment horizon Turning Point Brands is expected to generate 0.7 times more return on investment than Joint Stock. However, Turning Point Brands is 1.42 times less risky than Joint Stock. It trades about 0.28 of its potential returns per unit of risk. Joint Stock is currently generating about -0.03 per unit of risk. If you would invest 3,222 in Turning Point Brands on September 3, 2024 and sell it today you would earn a total of 2,867 from holding Turning Point Brands or generate 88.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Turning Point Brands vs. Joint Stock
Performance |
| Timeline |
| Turning Point Brands |
| Joint Stock |
Turning Point and Joint Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Turning Point and Joint Stock
The main advantage of trading using opposite Turning Point and Joint Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point position performs unexpectedly, Joint Stock 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 Joint Stock will offset losses from the drop in Joint Stock'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 |
| Joint Stock vs. Microbot Medical | Joint Stock vs. Pearson PLC ADR | Joint Stock vs. HNI Corp | Joint Stock vs. Franklin Wireless Corp |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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