Correlation Between Preferred Bank and TOWNSQUARE MEDIA
Can any of the company-specific risk be diversified away by investing in both Preferred Bank and TOWNSQUARE MEDIA 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 Preferred Bank and TOWNSQUARE MEDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Preferred Bank and TOWNSQUARE MEDIA INC, you can compare the effects of market volatilities on Preferred Bank and TOWNSQUARE MEDIA 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 Preferred Bank with a short position of TOWNSQUARE MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Preferred Bank and TOWNSQUARE MEDIA.
Diversification Opportunities for Preferred Bank and TOWNSQUARE MEDIA
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Preferred and TOWNSQUARE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Preferred Bank and TOWNSQUARE MEDIA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOWNSQUARE MEDIA INC and Preferred Bank 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 Preferred Bank are associated (or correlated) with TOWNSQUARE MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOWNSQUARE MEDIA INC has no effect on the direction of Preferred Bank i.e., Preferred Bank and TOWNSQUARE MEDIA go up and down completely randomly.
Pair Corralation between Preferred Bank and TOWNSQUARE MEDIA
Assuming the 90 days horizon Preferred Bank is expected to generate 0.84 times more return on investment than TOWNSQUARE MEDIA. However, Preferred Bank is 1.19 times less risky than TOWNSQUARE MEDIA. It trades about -0.01 of its potential returns per unit of risk. TOWNSQUARE MEDIA INC is currently generating about -0.06 per unit of risk. If you would invest 8,819 in Preferred Bank on November 6, 2024 and sell it today you would lose (119.00) from holding Preferred Bank or give up 1.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Preferred Bank vs. TOWNSQUARE MEDIA INC
Performance |
| Timeline |
| Preferred Bank |
| TOWNSQUARE MEDIA INC |
Preferred Bank and TOWNSQUARE MEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Preferred Bank and TOWNSQUARE MEDIA
The main advantage of trading using opposite Preferred Bank and TOWNSQUARE MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Preferred Bank position performs unexpectedly, TOWNSQUARE MEDIA 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 TOWNSQUARE MEDIA will offset losses from the drop in TOWNSQUARE MEDIA's long position.| Preferred Bank vs. Electronic Arts | Preferred Bank vs. AOI Electronics Co | Preferred Bank vs. Northern Data AG | Preferred Bank vs. UMC Electronics Co |
| TOWNSQUARE MEDIA vs. PLAY2CHILL SA ZY | TOWNSQUARE MEDIA vs. Universal Display | TOWNSQUARE MEDIA vs. Eastman Chemical | TOWNSQUARE MEDIA vs. Sanyo Chemical Industries |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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