Correlation Between Turning Point and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Turning Point and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on Turning Point and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Summit Materials.
Diversification Opportunities for Turning Point and Summit Materials
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Turning and Summit is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Turning Point i.e., Turning Point and Summit Materials go up and down completely randomly.
Pair Corralation between Turning Point and Summit Materials
Considering the 90-day investment horizon Turning Point Brands is expected to generate 0.94 times more return on investment than Summit Materials. However, Turning Point Brands is 1.06 times less risky than Summit Materials. It trades about 0.14 of its potential returns per unit of risk. Summit Materials is currently generating about 0.06 per unit of risk. If you would invest 2,303 in Turning Point Brands on August 31, 2024 and sell it today you would earn a total of 3,887 from holding Turning Point Brands or generate 168.78% 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. Summit Materials
Performance |
| Timeline |
| Turning Point Brands |
| Summit Materials |
Turning Point and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Turning Point and Summit Materials
The main advantage of trading using opposite Turning Point and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Turning Point vs. Universal | Turning Point vs. Imperial Brands PLC | Turning Point vs. British American Tobacco | Turning Point vs. Philip Morris International |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |