Correlation Between Turning Point and GE Vernova

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

Diversification Opportunities for Turning Point and GE Vernova

0.88

Correlation Coefficient

Turning Point  GE Vernova

Very poor diversification

The 3 months correlation between Turning and GEV is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova LLC 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 GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of Turning Point i.e., Turning Point and GE Vernova go up and down completely randomly.

Pair Corralation between Turning Point and GE Vernova

Considering the 90-day investment horizon Turning Point is expected to generate 1.23 times less return on investment than GE Vernova. But when comparing it to its historical volatility, Turning Point Brands is 1.19 times less risky than GE Vernova. It trades about 0.33 of its potential returns per unit of risk. GE Vernova LLC is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  19,844  in GE Vernova LLC on September 5, 2024 and sell it today you would earn a total of  13,348  from holding GE Vernova LLC or generate 67.26% return on investment over 90 days.

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

Turning Point Brands  vs.  GE Vernova LLC

Turning Point Brands

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Turning Point Brands are ranked lower than 25 (%) 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.

GE Vernova LLC

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GE Vernova LLC are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, GE Vernova showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Turning Point and GE Vernova

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

The idea behind Turning Point Brands and GE Vernova LLC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.