Correlation Between Turning Point and Westrock Coffee

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

Diversification Opportunities for Turning Point and Westrock Coffee

-0.07

Correlation Coefficient

Turning Point  Westrock Coffee

Good diversification

The 3 months correlation between Turning and Westrock is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee 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 Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Turning Point i.e., Turning Point and Westrock Coffee go up and down completely randomly.

Pair Corralation between Turning Point and Westrock Coffee

Considering the 90-day investment horizon Turning Point is expected to generate 42.43 times less return on investment than Westrock Coffee. But when comparing it to its historical volatility, Turning Point Brands is 1.99 times less risky than Westrock Coffee. It trades about 0.0 of its potential returns per unit of risk. Westrock Coffee is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  625.00  in Westrock Coffee on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Westrock Coffee or generate 16.0% return on investment over 90 days.

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

Turning Point Brands  vs.  Westrock Coffee

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.

Westrock Coffee

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Westrock Coffee are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Westrock Coffee unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Turning Point and Westrock Coffee

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

The idea behind Turning Point Brands and Westrock Coffee 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.