Correlation Between American Airlines and Townsquare Media
Can any of the company-specific risk be diversified away by investing in both American Airlines and Townsquare Media 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 American Airlines and Townsquare Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Airlines Group and Townsquare Media, you can compare the effects of market volatilities on American Airlines and Townsquare Media 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 American Airlines with a short position of Townsquare Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Airlines and Townsquare Media.
Diversification Opportunities for American Airlines and Townsquare Media
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Townsquare is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding American Airlines Group and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media and American Airlines 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 American Airlines Group are associated (or correlated) with Townsquare Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Townsquare Media has no effect on the direction of American Airlines i.e., American Airlines and Townsquare Media go up and down completely randomly.
Pair Corralation between American Airlines and Townsquare Media
Considering the 90-day investment horizon American Airlines Group is expected to generate 0.75 times more return on investment than Townsquare Media. However, American Airlines Group is 1.33 times less risky than Townsquare Media. It trades about 0.2 of its potential returns per unit of risk. Townsquare Media is currently generating about -0.08 per unit of risk. If you would invest 1,735 in American Airlines Group on October 25, 2024 and sell it today you would earn a total of 131.00 from holding American Airlines Group or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Airlines Group vs. Townsquare Media
Performance |
| Timeline |
| American Airlines |
| Townsquare Media |
American Airlines and Townsquare Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Airlines and Townsquare Media
The main advantage of trading using opposite American Airlines and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Airlines position performs unexpectedly, Townsquare Media 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 Townsquare Media will offset losses from the drop in Townsquare Media's long position.| American Airlines vs. Delta Air Lines | American Airlines vs. Southwest Airlines | American Airlines vs. JetBlue Airways Corp | American Airlines vs. United Airlines Holdings |
| Townsquare Media vs. Mirriad Advertising plc | Townsquare Media vs. INEO Tech Corp | Townsquare Media vs. Kidoz Inc | Townsquare Media vs. Marchex |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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