Correlation Between Associated British and Townsquare Media
Can any of the company-specific risk be diversified away by investing in both Associated British 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 Associated British and Townsquare Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Townsquare Media, you can compare the effects of market volatilities on Associated British 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 Associated British with a short position of Townsquare Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Townsquare Media.
Diversification Opportunities for Associated British and Townsquare Media
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Associated and Townsquare is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media and Associated British 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 Associated British Foods 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 Associated British i.e., Associated British and Townsquare Media go up and down completely randomly.
Pair Corralation between Associated British and Townsquare Media
Assuming the 90 days trading horizon Associated British Foods is expected to under-perform the Townsquare Media. But the stock apears to be less risky and, when comparing its historical volatility, Associated British Foods is 1.76 times less risky than Townsquare Media. The stock trades about -0.04 of its potential returns per unit of risk. The Townsquare Media is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 930.00 in Townsquare Media on September 13, 2024 and sell it today you would earn a total of 35.00 from holding Townsquare Media or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Townsquare Media
Performance |
| Timeline |
| Associated British Foods |
| Townsquare Media |
Associated British and Townsquare Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Townsquare Media
The main advantage of trading using opposite Associated British and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British 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.| Associated British vs. Hormel Foods | Associated British vs. Superior Plus Corp | Associated British vs. SIVERS SEMICONDUCTORS AB | Associated British vs. NorAm Drilling AS |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |