Correlation Between PENN NATL and TOWNSQUARE MEDIA
Can any of the company-specific risk be diversified away by investing in both PENN NATL 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 PENN NATL and TOWNSQUARE MEDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PENN NATL GAMING and TOWNSQUARE MEDIA INC, you can compare the effects of market volatilities on PENN NATL 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 PENN NATL with a short position of TOWNSQUARE MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN NATL and TOWNSQUARE MEDIA.
Diversification Opportunities for PENN NATL and TOWNSQUARE MEDIA
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PENN and TOWNSQUARE is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding PENN NATL GAMING 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 PENN NATL 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 PENN NATL GAMING 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 PENN NATL i.e., PENN NATL and TOWNSQUARE MEDIA go up and down completely randomly.
Pair Corralation between PENN NATL and TOWNSQUARE MEDIA
Assuming the 90 days trading horizon PENN NATL GAMING is expected to generate 1.23 times more return on investment than TOWNSQUARE MEDIA. However, PENN NATL is 1.23 times more volatile than TOWNSQUARE MEDIA INC. It trades about 0.36 of its potential returns per unit of risk. TOWNSQUARE MEDIA INC is currently generating about 0.14 per unit of risk. If you would invest 1,772 in PENN NATL GAMING on September 5, 2024 and sell it today you would earn a total of 341.00 from holding PENN NATL GAMING or generate 19.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PENN NATL GAMING vs. TOWNSQUARE MEDIA INC
Performance |
| Timeline |
| PENN NATL GAMING |
| TOWNSQUARE MEDIA INC |
PENN NATL and TOWNSQUARE MEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PENN NATL and TOWNSQUARE MEDIA
The main advantage of trading using opposite PENN NATL and TOWNSQUARE MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENN NATL 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 PENN NATL GAMING 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. TOTAL GABON | TOWNSQUARE MEDIA vs. Walgreens Boots Alliance | TOWNSQUARE MEDIA vs. Peak Resources Limited |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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