Correlation Between TOWNSQUARE MEDIA and EHEALTH
Can any of the company-specific risk be diversified away by investing in both TOWNSQUARE MEDIA and EHEALTH 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 EHEALTH 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 EHEALTH, you can compare the effects of market volatilities on TOWNSQUARE MEDIA and EHEALTH 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 EHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOWNSQUARE MEDIA and EHEALTH.
Diversification Opportunities for TOWNSQUARE MEDIA and EHEALTH
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TOWNSQUARE and EHEALTH is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding TOWNSQUARE MEDIA INC and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH 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 EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of TOWNSQUARE MEDIA i.e., TOWNSQUARE MEDIA and EHEALTH go up and down completely randomly.
Pair Corralation between TOWNSQUARE MEDIA and EHEALTH
Assuming the 90 days trading horizon TOWNSQUARE MEDIA is expected to generate 3.9 times less return on investment than EHEALTH. But when comparing it to its historical volatility, TOWNSQUARE MEDIA INC is 2.77 times less risky than EHEALTH. It trades about 0.09 of its potential returns per unit of risk. EHEALTH is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 441.00 in EHEALTH on September 3, 2024 and sell it today you would earn a total of 54.00 from holding EHEALTH or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOWNSQUARE MEDIA INC vs. EHEALTH
Performance |
| Timeline |
| TOWNSQUARE MEDIA INC |
| EHEALTH |
TOWNSQUARE MEDIA and EHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOWNSQUARE MEDIA and EHEALTH
The main advantage of trading using opposite TOWNSQUARE MEDIA and EHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOWNSQUARE MEDIA position performs unexpectedly, EHEALTH 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 EHEALTH will offset losses from the drop in EHEALTH's long position.| TOWNSQUARE MEDIA vs. TOTAL GABON | TOWNSQUARE MEDIA vs. Walgreens Boots Alliance | TOWNSQUARE MEDIA vs. Peak Resources Limited |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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