Correlation Between Group 1 and Townsquare Media

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Can any of the company-specific risk be diversified away by investing in both Group 1 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 Group 1 and Townsquare Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group 1 Automotive and Townsquare Media, you can compare the effects of market volatilities on Group 1 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 Group 1 with a short position of Townsquare Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 1 and Townsquare Media.

Diversification Opportunities for Group 1 and Townsquare Media

GroupTownsquareDiversified AwayGroupTownsquareDiversified Away100%
-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Group and Townsquare is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Group 1 Automotive and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media and Group 1 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 Group 1 Automotive 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 Group 1 i.e., Group 1 and Townsquare Media go up and down completely randomly.

Pair Corralation between Group 1 and Townsquare Media

Considering the 90-day investment horizon Group 1 Automotive is expected to generate 1.08 times more return on investment than Townsquare Media. However, Group 1 is 1.08 times more volatile than Townsquare Media. It trades about 0.02 of its potential returns per unit of risk. Townsquare Media is currently generating about -0.15 per unit of risk. If you would invest  44,957  in Group 1 Automotive on November 25, 2024 and sell it today you would earn a total of  159.00  from holding Group 1 Automotive or generate 0.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Group 1 Automotive  vs.  Townsquare Media

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-5051015
JavaScript chart by amCharts 3.21.15GPI TSQ
       Timeline  
Group 1 Automotive 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Group 1 Automotive are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Group 1 is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb410420430440450460470480490
Townsquare Media 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Townsquare Media has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb8.599.510

Group 1 and Townsquare Media Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.48-3.35-2.23-1.110.01871.162.353.534.72 0.050.100.15
JavaScript chart by amCharts 3.21.15GPI TSQ
       Returns  

Pair Trading with Group 1 and Townsquare Media

The main advantage of trading using opposite Group 1 and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 1 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 Group 1 Automotive 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.
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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