Correlation Between Townsquare Media and PENN NATL
Can any of the company-specific risk be diversified away by investing in both Townsquare Media and PENN NATL 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 PENN NATL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Townsquare Media and PENN NATL GAMING, you can compare the effects of market volatilities on Townsquare Media and PENN NATL 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 PENN NATL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and PENN NATL.
Diversification Opportunities for Townsquare Media and PENN NATL
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Townsquare and PENN is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and PENN NATL GAMING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN NATL GAMING 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 PENN NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN NATL GAMING has no effect on the direction of Townsquare Media i.e., Townsquare Media and PENN NATL go up and down completely randomly.
Pair Corralation between Townsquare Media and PENN NATL
Assuming the 90 days horizon Townsquare Media is expected to generate 1.22 times less return on investment than PENN NATL. But when comparing it to its historical volatility, Townsquare Media is 1.25 times less risky than PENN NATL. It trades about 0.12 of its potential returns per unit of risk. PENN NATL GAMING is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,592 in PENN NATL GAMING on September 12, 2024 and sell it today you would earn a total of 280.00 from holding PENN NATL GAMING or generate 17.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Townsquare Media vs. PENN NATL GAMING
Performance |
| Timeline |
| Townsquare Media |
| PENN NATL GAMING |
Townsquare Media and PENN NATL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Townsquare Media and PENN NATL
The main advantage of trading using opposite Townsquare Media and PENN NATL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Townsquare Media position performs unexpectedly, PENN NATL 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 PENN NATL will offset losses from the drop in PENN NATL's long position.| Townsquare Media vs. Austevoll Seafood ASA | Townsquare Media vs. Bausch Health Companies | Townsquare Media vs. Associated British Foods | Townsquare Media vs. SHIP HEALTHCARE HLDGINC |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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