Correlation Between Turning Point and Tesla
Can any of the company-specific risk be diversified away by investing in both Turning Point and Tesla 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 Tesla 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 Tesla Inc, you can compare the effects of market volatilities on Turning Point and Tesla 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 Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Tesla.
Diversification Opportunities for Turning Point and Tesla
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Turning and Tesla is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Turning Point i.e., Turning Point and Tesla go up and down completely randomly.
Pair Corralation between Turning Point and Tesla
Considering the 90-day investment horizon Turning Point is expected to generate 1.17 times less return on investment than Tesla. But when comparing it to its historical volatility, Turning Point Brands is 2.31 times less risky than Tesla. It trades about 0.28 of its potential returns per unit of risk. Tesla Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 17,629 in Tesla Inc on September 1, 2024 and sell it today you would earn a total of 16,887 from holding Tesla Inc or generate 95.79% 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. Tesla Inc
Performance |
| Timeline |
| Turning Point Brands |
| Tesla Inc |
Turning Point and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Turning Point and Tesla
The main advantage of trading using opposite Turning Point and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla'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 |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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