Correlation Between Townsquare Media and Trimble
Can any of the company-specific risk be diversified away by investing in both Townsquare Media and Trimble 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 Trimble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Townsquare Media and Trimble, you can compare the effects of market volatilities on Townsquare Media and Trimble 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 Trimble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and Trimble.
Diversification Opportunities for Townsquare Media and Trimble
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Townsquare and Trimble is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Trimble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimble 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 Trimble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimble has no effect on the direction of Townsquare Media i.e., Townsquare Media and Trimble go up and down completely randomly.
Pair Corralation between Townsquare Media and Trimble
Assuming the 90 days horizon Townsquare Media is expected to generate 5.96 times less return on investment than Trimble. But when comparing it to its historical volatility, Townsquare Media is 2.16 times less risky than Trimble. It trades about 0.09 of its potential returns per unit of risk. Trimble is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 5,626 in Trimble on September 4, 2024 and sell it today you would earn a total of 1,322 from holding Trimble or generate 23.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Townsquare Media vs. Trimble
Performance |
| Timeline |
| Townsquare Media |
| Trimble |
Townsquare Media and Trimble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Townsquare Media and Trimble
The main advantage of trading using opposite Townsquare Media and Trimble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Townsquare Media position performs unexpectedly, Trimble 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 Trimble will offset losses from the drop in Trimble's long position.| Townsquare Media vs. SENECA FOODS A | Townsquare Media vs. EBRO FOODS | Townsquare Media vs. United Natural Foods | Townsquare Media vs. Ameriprise Financial |
| Trimble vs. DALATA HOTEL | Trimble vs. Waste Management | Trimble vs. MIRAMAR HOTEL INV | Trimble vs. Cardinal Health |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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