Correlation Between Network CN and Turning Point

Can any of the company-specific risk be diversified away by investing in both Network CN and Turning Point 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 Network CN and Turning Point into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Network CN and Turning Point Brands, you can compare the effects of market volatilities on Network CN and Turning Point 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 Network CN with a short position of Turning Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Network CN and Turning Point.

Diversification Opportunities for Network CN and Turning Point

-0.04

Correlation Coefficient

Network CN  Turning Point

Good diversification

The 3 months correlation between Network and Turning is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Network CN and Turning Point Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turning Point Brands and Network CN 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 Network CN are associated (or correlated) with Turning Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turning Point Brands has no effect on the direction of Network CN i.e., Network CN and Turning Point go up and down completely randomly.

Pair Corralation between Network CN and Turning Point

Given the investment horizon of 90 days Network CN is expected to generate 22.35 times more return on investment than Turning Point. However, Network CN is 22.35 times more volatile than Turning Point Brands. It trades about 0.16 of its potential returns per unit of risk. Turning Point Brands is currently generating about 0.0 per unit of risk. If you would invest  4.21  in Network CN on December 28, 2024 and sell it today you would earn a total of  5.79  from holding Network CN or generate 137.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Network CN  vs.  Turning Point Brands

Network CN

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Network CN are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Network CN displayed solid returns over the last few months and may actually be approaching a breakup point.

Turning Point Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Turning Point Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Turning Point is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Network CN and Turning Point

The main advantage of trading using opposite Network CN and Turning Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Network CN position performs unexpectedly, Turning Point 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 Turning Point will offset losses from the drop in Turning Point's long position.

The idea behind Network CN and Turning Point Brands pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.