Correlation Between TOWNSQUARE MEDIA and British American
Can any of the company-specific risk be diversified away by investing in both TOWNSQUARE MEDIA and British American 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 TOWNSQUARE MEDIA and British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOWNSQUARE MEDIA INC and British American Tobacco, you can compare the effects of market volatilities on TOWNSQUARE MEDIA and British American 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 TOWNSQUARE MEDIA with a short position of British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOWNSQUARE MEDIA and British American.
Diversification Opportunities for TOWNSQUARE MEDIA and British American
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TOWNSQUARE and British is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding TOWNSQUARE MEDIA INC and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco and TOWNSQUARE MEDIA 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 TOWNSQUARE MEDIA INC are associated (or correlated) with British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of TOWNSQUARE MEDIA i.e., TOWNSQUARE MEDIA and British American go up and down completely randomly.
Pair Corralation between TOWNSQUARE MEDIA and British American
Assuming the 90 days trading horizon TOWNSQUARE MEDIA INC is expected to under-perform the British American. In addition to that, TOWNSQUARE MEDIA is 2.18 times more volatile than British American Tobacco. It trades about -0.05 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.32 per unit of volatility. If you would invest 3,574 in British American Tobacco on November 7, 2024 and sell it today you would earn a total of 298.00 from holding British American Tobacco or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOWNSQUARE MEDIA INC vs. British American Tobacco
Performance |
| Timeline |
| TOWNSQUARE MEDIA INC |
| British American Tobacco |
TOWNSQUARE MEDIA and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOWNSQUARE MEDIA and British American
The main advantage of trading using opposite TOWNSQUARE MEDIA and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOWNSQUARE MEDIA position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| TOWNSQUARE MEDIA vs. PLAY2CHILL SA ZY | TOWNSQUARE MEDIA vs. Universal Display | TOWNSQUARE MEDIA vs. Eastman Chemical | TOWNSQUARE MEDIA vs. Sanyo Chemical Industries |
| British American vs. MPH Health Care | British American vs. National Health Investors | British American vs. Siemens Healthineers AG | British American vs. PREMIER FOODS |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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