Correlation Between GM and TOWNSQUARE MEDIA
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and TOWNSQUARE MEDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and TOWNSQUARE MEDIA INC, you can compare the effects of market volatilities on GM 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 GM with a short position of TOWNSQUARE MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and TOWNSQUARE MEDIA.
Diversification Opportunities for GM and TOWNSQUARE MEDIA
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and TOWNSQUARE is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and TOWNSQUARE MEDIA go up and down completely randomly.
Pair Corralation between GM and TOWNSQUARE MEDIA
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the TOWNSQUARE MEDIA. In addition to that, GM is 1.21 times more volatile than TOWNSQUARE MEDIA INC. It trades about -0.1 of its total potential returns per unit of risk. TOWNSQUARE MEDIA INC is currently generating about 0.07 per unit of volatility. If you would invest 846.00 in TOWNSQUARE MEDIA INC on November 1, 2024 and sell it today you would earn a total of 24.00 from holding TOWNSQUARE MEDIA INC or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
General Motors vs. TOWNSQUARE MEDIA INC
Performance |
| Timeline |
| General Motors |
| TOWNSQUARE MEDIA INC |
GM and TOWNSQUARE MEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and TOWNSQUARE MEDIA
The main advantage of trading using opposite GM and TOWNSQUARE MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors and TOWNSQUARE MEDIA INC 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. Kingdee International Software | TOWNSQUARE MEDIA vs. Spirent Communications plc | TOWNSQUARE MEDIA vs. Wayside Technology Group | TOWNSQUARE MEDIA vs. Chengdu PUTIAN Telecommunications |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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