Correlation Between TAAT Global and Turning Point

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

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

Diversification Opportunities for TAAT Global and Turning Point

-0.75

Correlation Coefficient

TAAT Global  Turning Point

Pay attention - limited upside

The 3 months correlation between TAAT and Turning is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding TAAT Global Alternatives 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 TAAT Global 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 TAAT Global Alternatives 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 TAAT Global i.e., TAAT Global and Turning Point go up and down completely randomly.

Pair Corralation between TAAT Global and Turning Point

Assuming the 90 days horizon TAAT Global Alternatives is expected to generate 13.37 times more return on investment than Turning Point. However, TAAT Global is 13.37 times more volatile than Turning Point Brands. It trades about 0.1 of its potential returns per unit of risk. Turning Point Brands is currently generating about 0.26 per unit of risk. If you would invest  14.00  in TAAT Global Alternatives on October 1, 2024 and sell it today you would lose (3.00) from holding TAAT Global Alternatives or give up 21.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

TAAT Global Alternatives  vs.  Turning Point Brands

TAAT Global Alternatives

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TAAT Global Alternatives has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Turning Point Brands

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Turning Point Brands are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Turning Point sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TAAT Global and Turning Point

The main advantage of trading using opposite TAAT Global and Turning Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAAT Global 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 TAAT Global Alternatives 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.