Correlation Between Turning Point and AA Mission

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

Diversification Opportunities for Turning Point and AA Mission

0.75

Correlation Coefficient

Turning Point  AA Mission

Poor diversification

The 3 months correlation between Turning and AAM is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point Brands and AA Mission Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AA Mission Acquisition 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 AA Mission. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AA Mission Acquisition has no effect on the direction of Turning Point i.e., Turning Point and AA Mission go up and down completely randomly.

Pair Corralation between Turning Point and AA Mission

Considering the 90-day investment horizon Turning Point Brands is expected to generate 15.39 times more return on investment than AA Mission. However, Turning Point is 15.39 times more volatile than AA Mission Acquisition. It trades about 0.19 of its potential returns per unit of risk. AA Mission Acquisition is currently generating about 0.14 per unit of risk. If you would invest  7,338  in Turning Point Brands on May 27, 2025 and sell it today you would earn a total of  2,379  from holding Turning Point Brands or generate 32.42% return on investment over 90 days.

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

Turning Point Brands  vs.  AA Mission Acquisition

Turning Point Brands

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Turning Point Brands are ranked lower than 15 (%) 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.

AA Mission Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AA Mission Acquisition are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, AA Mission is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Turning Point and AA Mission

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

The idea behind Turning Point Brands and AA Mission Acquisition 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.