Correlation Between RCS MediaGroup and Townsquare Media
Can any of the company-specific risk be diversified away by investing in both RCS MediaGroup 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 RCS MediaGroup and Townsquare Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCS MediaGroup SpA and Townsquare Media, you can compare the effects of market volatilities on RCS MediaGroup 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 RCS MediaGroup with a short position of Townsquare Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCS MediaGroup and Townsquare Media.
Diversification Opportunities for RCS MediaGroup and Townsquare Media
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between RCS and Townsquare is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media and RCS MediaGroup 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 RCS MediaGroup SpA 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 RCS MediaGroup i.e., RCS MediaGroup and Townsquare Media go up and down completely randomly.
Pair Corralation between RCS MediaGroup and Townsquare Media
Assuming the 90 days trading horizon RCS MediaGroup SpA is expected to generate 0.9 times more return on investment than Townsquare Media. However, RCS MediaGroup SpA is 1.12 times less risky than Townsquare Media. It trades about 0.44 of its potential returns per unit of risk. Townsquare Media is currently generating about -0.03 per unit of risk. If you would invest 76.00 in RCS MediaGroup SpA on August 28, 2024 and sell it today you would earn a total of 10.00 from holding RCS MediaGroup SpA or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
RCS MediaGroup SpA vs. Townsquare Media
Performance |
| Timeline |
| RCS MediaGroup SpA |
| Townsquare Media |
RCS MediaGroup and Townsquare Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCS MediaGroup and Townsquare Media
The main advantage of trading using opposite RCS MediaGroup and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCS MediaGroup 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.| RCS MediaGroup vs. Superior Plus Corp | RCS MediaGroup vs. NMI Holdings | RCS MediaGroup vs. Origin Agritech | RCS MediaGroup vs. SIVERS SEMICONDUCTORS AB |
| Townsquare Media vs. Xtrackers ShortDAX | Townsquare Media vs. Lyxor 1 | Townsquare Media vs. Xtrackers LevDAX |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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