Correlation Between TOWNSQUARE MEDIA and Natural Health
Can any of the company-specific risk be diversified away by investing in both TOWNSQUARE MEDIA and Natural Health 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 Natural Health 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 Natural Health Trends, you can compare the effects of market volatilities on TOWNSQUARE MEDIA and Natural Health 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 Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOWNSQUARE MEDIA and Natural Health.
Diversification Opportunities for TOWNSQUARE MEDIA and Natural Health
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between TOWNSQUARE and Natural is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding TOWNSQUARE MEDIA INC and Natural Health Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trends 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 Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trends has no effect on the direction of TOWNSQUARE MEDIA i.e., TOWNSQUARE MEDIA and Natural Health go up and down completely randomly.
Pair Corralation between TOWNSQUARE MEDIA and Natural Health
Assuming the 90 days trading horizon TOWNSQUARE MEDIA is expected to generate 1.09 times less return on investment than Natural Health. But when comparing it to its historical volatility, TOWNSQUARE MEDIA INC is 1.09 times less risky than Natural Health. It trades about 0.04 of its potential returns per unit of risk. Natural Health Trends is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 291.00 in Natural Health Trends on October 13, 2024 and sell it today you would earn a total of 151.00 from holding Natural Health Trends or generate 51.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOWNSQUARE MEDIA INC vs. Natural Health Trends
Performance |
| Timeline |
| TOWNSQUARE MEDIA INC |
| Natural Health Trends |
TOWNSQUARE MEDIA and Natural Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOWNSQUARE MEDIA and Natural Health
The main advantage of trading using opposite TOWNSQUARE MEDIA and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOWNSQUARE MEDIA position performs unexpectedly, Natural Health 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 Natural Health will offset losses from the drop in Natural Health's long position.| TOWNSQUARE MEDIA vs. Boyd Gaming | TOWNSQUARE MEDIA vs. CONTAGIOUS GAMING INC | TOWNSQUARE MEDIA vs. DETALION GAMES SA | TOWNSQUARE MEDIA vs. Hochschild Mining plc |
| Natural Health vs. MACOM Technology Solutions | Natural Health vs. SCOTT TECHNOLOGY | Natural Health vs. SMA Solar Technology | Natural Health vs. Wayside Technology Group |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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