Correlation Between Turning Point and Grounded People

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

Diversification Opportunities for Turning Point and Grounded People

0.0

Correlation Coefficient

Turning Point  Grounded People

Pay attention - limited upside

The 3 months correlation between Turning and Grounded is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Grounded People Apparel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grounded People Apparel 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 Grounded People. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grounded People Apparel has no effect on the direction of Turning Point i.e., Turning Point and Grounded People go up and down completely randomly.

Pair Corralation between Turning Point and Grounded People

Considering the 90-day investment horizon Turning Point Brands is expected to generate 0.37 times more return on investment than Grounded People. However, Turning Point Brands is 2.68 times less risky than Grounded People. It trades about 0.1 of its potential returns per unit of risk. Grounded People Apparel is currently generating about 0.03 per unit of risk. If you would invest  2,335  in Turning Point Brands on October 25, 2024 and sell it today you would earn a total of  3,310  from holding Turning Point Brands or generate 141.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Turning Point Brands  vs.  Grounded People Apparel

Turning Point Brands

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Turning Point Brands are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Turning Point sustained solid returns over the last few months and may actually be approaching a breakup point.

Grounded People Apparel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grounded People Apparel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Grounded People is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Turning Point and Grounded People

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

The idea behind Turning Point Brands and Grounded People Apparel 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.