Correlation Between Turning Point and Waste Management
Can any of the company-specific risk be diversified away by investing in both Turning Point and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on Turning Point and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Waste Management.
Diversification Opportunities for Turning Point and Waste Management
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Turning and Waste is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Turning Point i.e., Turning Point and Waste Management go up and down completely randomly.
Pair Corralation between Turning Point and Waste Management
Considering the 90-day investment horizon Turning Point Brands is expected to generate 2.65 times more return on investment than Waste Management. However, Turning Point is 2.65 times more volatile than Waste Management. It trades about 0.56 of its potential returns per unit of risk. Waste Management is currently generating about 0.3 per unit of risk. If you would invest 4,723 in Turning Point Brands on September 1, 2024 and sell it today you would earn a total of 1,467 from holding Turning Point Brands or generate 31.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Turning Point Brands vs. Waste Management
Performance |
| Timeline |
| Turning Point Brands |
| Waste Management |
Turning Point and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Turning Point and Waste Management
The main advantage of trading using opposite Turning Point and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management'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 |
| Waste Management vs. CRA International | Waste Management vs. ICF International | Waste Management vs. Forrester Research | Waste Management vs. Huron Consulting Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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