Correlation Between EBRO FOODS and Townsquare Media
Can any of the company-specific risk be diversified away by investing in both EBRO FOODS 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 EBRO FOODS and Townsquare Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EBRO FOODS and Townsquare Media, you can compare the effects of market volatilities on EBRO FOODS 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 EBRO FOODS with a short position of Townsquare Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBRO FOODS and Townsquare Media.
Diversification Opportunities for EBRO FOODS and Townsquare Media
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EBRO and Townsquare is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding EBRO FOODS and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media and EBRO FOODS 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 EBRO 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 EBRO FOODS i.e., EBRO FOODS and Townsquare Media go up and down completely randomly.
Pair Corralation between EBRO FOODS and Townsquare Media
Assuming the 90 days trading horizon EBRO FOODS is expected to generate 74.87 times less return on investment than Townsquare Media. But when comparing it to its historical volatility, EBRO FOODS is 2.48 times less risky than Townsquare Media. It trades about 0.0 of its potential returns per unit of risk. Townsquare Media is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 842.00 in Townsquare Media on September 12, 2024 and sell it today you would earn a total of 123.00 from holding Townsquare Media or generate 14.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EBRO FOODS vs. Townsquare Media
Performance |
| Timeline |
| EBRO FOODS |
| Townsquare Media |
EBRO FOODS and Townsquare Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBRO FOODS and Townsquare Media
The main advantage of trading using opposite EBRO FOODS and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBRO FOODS 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.The idea behind EBRO FOODS and Townsquare Media pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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