Correlation Between Townsquare Media and MGIC INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Townsquare Media and MGIC INVESTMENT 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 MGIC INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Townsquare Media and MGIC INVESTMENT, you can compare the effects of market volatilities on Townsquare Media and MGIC INVESTMENT 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 MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and MGIC INVESTMENT.
Diversification Opportunities for Townsquare Media and MGIC INVESTMENT
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Townsquare and MGIC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT 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 are associated (or correlated) with MGIC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC INVESTMENT has no effect on the direction of Townsquare Media i.e., Townsquare Media and MGIC INVESTMENT go up and down completely randomly.
Pair Corralation between Townsquare Media and MGIC INVESTMENT
Assuming the 90 days horizon Townsquare Media is expected to generate 2.47 times less return on investment than MGIC INVESTMENT. In addition to that, Townsquare Media is 1.54 times more volatile than MGIC INVESTMENT. It trades about 0.14 of its total potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.53 per unit of volatility. If you would invest 2,167 in MGIC INVESTMENT on September 5, 2024 and sell it today you would earn a total of 313.00 from holding MGIC INVESTMENT or generate 14.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Townsquare Media vs. MGIC INVESTMENT
Performance |
| Timeline |
| Townsquare Media |
| MGIC INVESTMENT |
Townsquare Media and MGIC INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Townsquare Media and MGIC INVESTMENT
The main advantage of trading using opposite Townsquare Media and MGIC INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Townsquare Media position performs unexpectedly, MGIC INVESTMENT 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 MGIC INVESTMENT will offset losses from the drop in MGIC INVESTMENT's long position.| Townsquare Media vs. CAL MAINE FOODS | Townsquare Media vs. TYSON FOODS A | Townsquare Media vs. United Natural Foods | Townsquare Media vs. Iridium Communications |
| MGIC INVESTMENT vs. Townsquare Media | MGIC INVESTMENT vs. HANOVER INSURANCE | MGIC INVESTMENT vs. Seven West Media | MGIC INVESTMENT vs. Selective Insurance 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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