Correlation Between Turning Point and MARATHON

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

Diversification Opportunities for Turning Point and MARATHON

0.06

Correlation Coefficient

Turning Point  MARATHON

Significant diversification

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

Pair Corralation between Turning Point and MARATHON

Considering the 90-day investment horizon Turning Point Brands is expected to generate 2.39 times more return on investment than MARATHON. However, Turning Point is 2.39 times more volatile than MARATHON PETE P. It trades about 0.09 of its potential returns per unit of risk. MARATHON PETE P is currently generating about 0.02 per unit of risk. If you would invest  5,244  in Turning Point Brands on October 11, 2024 and sell it today you would earn a total of  394.00  from holding Turning Point Brands or generate 7.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.12%
Values	Daily Returns

Turning Point Brands  vs.  MARATHON PETE P

Turning Point Brands

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Turning Point Brands are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Turning Point sustained solid returns over the last few months and may actually be approaching a breakup point.

MARATHON PETE P

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Turning Point and MARATHON

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

The idea behind Turning Point Brands and MARATHON PETE P 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.