Correlation Between Turning Point and BG Foods

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

Diversification Opportunities for Turning Point and BG Foods

-0.53

Correlation Coefficient

Turning Point  BG Foods

Excellent diversification

The 3 months correlation between Turning and BGS is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and BG Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BG Foods 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 BG Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BG Foods has no effect on the direction of Turning Point i.e., Turning Point and BG Foods go up and down completely randomly.

Pair Corralation between Turning Point and BG Foods

Considering the 90-day investment horizon Turning Point Brands is expected to generate 0.87 times more return on investment than BG Foods. However, Turning Point Brands is 1.15 times less risky than BG Foods. It trades about 0.0 of its potential returns per unit of risk. BG Foods is currently generating about -0.01 per unit of risk. If you would invest  5,976  in Turning Point Brands on December 27, 2024 and sell it today you would lose (64.00) from holding Turning Point Brands or give up 1.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Turning Point Brands  vs.  BG Foods

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.

BG Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days BG Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, BG Foods is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Turning Point and BG Foods

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

The idea behind Turning Point Brands and BG Foods 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..