Correlation Between Turning Point and Ark Restaurants

Can any of the company-specific risk be diversified away by investing in both Turning Point and Ark Restaurants 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 Ark Restaurants 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 Ark Restaurants Corp, you can compare the effects of market volatilities on Turning Point and Ark Restaurants 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 Ark Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turning Point and Ark Restaurants.

Diversification Opportunities for Turning Point and Ark Restaurants

-0.06

Correlation Coefficient

Turning Point  Ark Restaurants

Good diversification

The 3 months correlation between Turning and Ark is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Ark Restaurants Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ark Restaurants Corp 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 Ark Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ark Restaurants Corp has no effect on the direction of Turning Point i.e., Turning Point and Ark Restaurants go up and down completely randomly.

Pair Corralation between Turning Point and Ark Restaurants

Considering the 90-day investment horizon Turning Point Brands is expected to generate 0.47 times more return on investment than Ark Restaurants. However, Turning Point Brands is 2.12 times less risky than Ark Restaurants. It trades about 0.26 of its potential returns per unit of risk. Ark Restaurants Corp is currently generating about -0.02 per unit of risk. If you would invest  3,236  in Turning Point Brands on September 24, 2024 and sell it today you would earn a total of  2,678  from holding Turning Point Brands or generate 82.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.43%
Values	Daily Returns

Turning Point Brands  vs.  Ark Restaurants Corp

Turning Point Brands

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Turning Point Brands are ranked lower than 20 (%) 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.

Ark Restaurants Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ark Restaurants Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking signals, Ark Restaurants is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Turning Point and Ark Restaurants

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

The idea behind Turning Point Brands and Ark Restaurants Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.