Correlation Between TOWNSQUARE MEDIA and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both TOWNSQUARE MEDIA and Sterling Construction 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 Sterling Construction 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 Sterling Construction, you can compare the effects of market volatilities on TOWNSQUARE MEDIA and Sterling Construction 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 Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOWNSQUARE MEDIA and Sterling Construction.
Diversification Opportunities for TOWNSQUARE MEDIA and Sterling Construction
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TOWNSQUARE and Sterling is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding TOWNSQUARE MEDIA INC and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction 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 Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of TOWNSQUARE MEDIA i.e., TOWNSQUARE MEDIA and Sterling Construction go up and down completely randomly.
Pair Corralation between TOWNSQUARE MEDIA and Sterling Construction
Assuming the 90 days trading horizon TOWNSQUARE MEDIA is expected to generate 22.28 times less return on investment than Sterling Construction. But when comparing it to its historical volatility, TOWNSQUARE MEDIA INC is 2.54 times less risky than Sterling Construction. It trades about 0.03 of its potential returns per unit of risk. Sterling Construction is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 14,385 in Sterling Construction on August 30, 2024 and sell it today you would earn a total of 4,690 from holding Sterling Construction or generate 32.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
TOWNSQUARE MEDIA INC vs. Sterling Construction
Performance |
| Timeline |
| TOWNSQUARE MEDIA INC |
| Sterling Construction |
TOWNSQUARE MEDIA and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOWNSQUARE MEDIA and Sterling Construction
The main advantage of trading using opposite TOWNSQUARE MEDIA and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOWNSQUARE MEDIA position performs unexpectedly, Sterling Construction 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 Sterling Construction will offset losses from the drop in Sterling Construction's long position.| TOWNSQUARE MEDIA vs. NISSAN CHEMICAL IND | TOWNSQUARE MEDIA vs. Pebblebrook Hotel Trust | TOWNSQUARE MEDIA vs. CENTURIA OFFICE REIT | TOWNSQUARE MEDIA vs. Eastman Chemical |
| Sterling Construction vs. QBE Insurance Group | Sterling Construction vs. HK Electric Investments | Sterling Construction vs. REVO INSURANCE SPA | Sterling Construction vs. The Hanover Insurance |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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