Correlation Between Turning Point and Western Sierra
Can any of the company-specific risk be diversified away by investing in both Turning Point and Western Sierra 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 Western Sierra 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 Western Sierra Mining, you can compare the effects of market volatilities on Turning Point and Western Sierra 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 Western Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Western Sierra.
Diversification Opportunities for Turning Point and Western Sierra
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Turning and Western is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Western Sierra Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Sierra Mining 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 Western Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Sierra Mining has no effect on the direction of Turning Point i.e., Turning Point and Western Sierra go up and down completely randomly.
Pair Corralation between Turning Point and Western Sierra
Considering the 90-day investment horizon Turning Point is expected to generate 48.14 times less return on investment than Western Sierra. But when comparing it to its historical volatility, Turning Point Brands is 60.46 times less risky than Western Sierra. It trades about 0.14 of its potential returns per unit of risk. Western Sierra Mining is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 7.37 in Western Sierra Mining on August 31, 2024 and sell it today you would lose (6.69) from holding Western Sierra Mining or give up 90.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Turning Point Brands vs. Western Sierra Mining
Performance |
| Timeline |
| Turning Point Brands |
| Western Sierra Mining |
Turning Point and Western Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Turning Point and Western Sierra
The main advantage of trading using opposite Turning Point and Western Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point position performs unexpectedly, Western Sierra 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 Western Sierra will offset losses from the drop in Western Sierra'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 |
| Western Sierra vs. Green Cures Botanical | Western Sierra vs. Cann American Corp | Western Sierra vs. Rimrock Gold Corp | Western Sierra vs. Galexxy Holdings |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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