Correlation Between Townsquare Media and Nokia
Can any of the company-specific risk be diversified away by investing in both Townsquare Media and Nokia 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 Nokia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Townsquare Media and Nokia, you can compare the effects of market volatilities on Townsquare Media and Nokia 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 Nokia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and Nokia.
Diversification Opportunities for Townsquare Media and Nokia
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Townsquare and Nokia is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Nokia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nokia 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 Nokia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nokia has no effect on the direction of Townsquare Media i.e., Townsquare Media and Nokia go up and down completely randomly.
Pair Corralation between Townsquare Media and Nokia
Assuming the 90 days horizon Townsquare Media is expected to generate 1.2 times more return on investment than Nokia. However, Townsquare Media is 1.2 times more volatile than Nokia. It trades about 0.14 of its potential returns per unit of risk. Nokia is currently generating about -0.21 per unit of risk. If you would invest 895.00 in Townsquare Media on September 5, 2024 and sell it today you would earn a total of 50.00 from holding Townsquare Media or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Townsquare Media vs. Nokia
Performance |
| Timeline |
| Townsquare Media |
| Nokia |
Townsquare Media and Nokia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Townsquare Media and Nokia
The main advantage of trading using opposite Townsquare Media and Nokia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Townsquare Media position performs unexpectedly, Nokia 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 Nokia will offset losses from the drop in Nokia'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 |
| Nokia vs. Gladstone Investment | Nokia vs. METHODE ELECTRONICS | Nokia vs. STMICROELECTRONICS | Nokia vs. STORE ELECTRONIC |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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