Correlation Between Balchem and Townsquare Media
Can any of the company-specific risk be diversified away by investing in both Balchem 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 Balchem and Townsquare Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balchem and Townsquare Media, you can compare the effects of market volatilities on Balchem 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 Balchem with a short position of Townsquare Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and Townsquare Media.
Diversification Opportunities for Balchem and Townsquare Media
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Balchem and Townsquare is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media and Balchem 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 Balchem 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 Balchem i.e., Balchem and Townsquare Media go up and down completely randomly.
Pair Corralation between Balchem and Townsquare Media
Given the investment horizon of 90 days Balchem is expected to generate 0.45 times more return on investment than Townsquare Media. However, Balchem is 2.21 times less risky than Townsquare Media. It trades about 0.04 of its potential returns per unit of risk. Townsquare Media is currently generating about -0.1 per unit of risk. If you would invest 15,858 in Balchem on November 3, 2024 and sell it today you would earn a total of 138.00 from holding Balchem or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balchem vs. Townsquare Media
Performance |
| Timeline |
| Balchem |
| Townsquare Media |
Balchem and Townsquare Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balchem and Townsquare Media
The main advantage of trading using opposite Balchem and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem 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.| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
| 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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