Correlation Between American Eagle and TOWNSQUARE MEDIA
Can any of the company-specific risk be diversified away by investing in both American Eagle 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 Eagle 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 Eagle Outfitters and TOWNSQUARE MEDIA INC, you can compare the effects of market volatilities on American Eagle 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 Eagle with a short position of TOWNSQUARE MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and TOWNSQUARE MEDIA.
Diversification Opportunities for American Eagle and TOWNSQUARE MEDIA
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and TOWNSQUARE is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Outfitters and TOWNSQUARE MEDIA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOWNSQUARE MEDIA INC and American Eagle 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 Eagle Outfitters 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 INC has no effect on the direction of American Eagle i.e., American Eagle and TOWNSQUARE MEDIA go up and down completely randomly.
Pair Corralation between American Eagle and TOWNSQUARE MEDIA
Assuming the 90 days trading horizon American Eagle Outfitters is expected to under-perform the TOWNSQUARE MEDIA. In addition to that, American Eagle is 1.09 times more volatile than TOWNSQUARE MEDIA INC. It trades about -0.03 of its total potential returns per unit of risk. TOWNSQUARE MEDIA INC is currently generating about 0.0 per unit of volatility. If you would invest 960.00 in TOWNSQUARE MEDIA INC on August 29, 2024 and sell it today you would lose (25.00) from holding TOWNSQUARE MEDIA INC or give up 2.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Outfitters vs. TOWNSQUARE MEDIA INC
Performance |
| Timeline |
| American Eagle Outfitters |
| TOWNSQUARE MEDIA INC |
American Eagle and TOWNSQUARE MEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and TOWNSQUARE MEDIA
The main advantage of trading using opposite American Eagle and TOWNSQUARE MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle 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 Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc | American Eagle vs. Apple Inc |
| TOWNSQUARE MEDIA vs. Calibre Mining Corp | TOWNSQUARE MEDIA vs. COLUMBIA SPORTSWEAR | TOWNSQUARE MEDIA vs. LG Display Co | TOWNSQUARE MEDIA vs. PLAYTIKA HOLDING DL 01 |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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