Correlation Between SkyWest and Townsquare Media
Can any of the company-specific risk be diversified away by investing in both SkyWest 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 SkyWest and Townsquare Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SkyWest and Townsquare Media, you can compare the effects of market volatilities on SkyWest 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 SkyWest with a short position of Townsquare Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of SkyWest and Townsquare Media.
Diversification Opportunities for SkyWest and Townsquare Media
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between SkyWest and Townsquare is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding SkyWest and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media and SkyWest 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 SkyWest 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 SkyWest i.e., SkyWest and Townsquare Media go up and down completely randomly.
Pair Corralation between SkyWest and Townsquare Media
Given the investment horizon of 90 days SkyWest is expected to generate 0.78 times more return on investment than Townsquare Media. However, SkyWest is 1.28 times less risky than Townsquare Media. It trades about 0.31 of its potential returns per unit of risk. Townsquare Media is currently generating about -0.08 per unit of risk. If you would invest 10,333 in SkyWest on October 25, 2024 and sell it today you would earn a total of 1,273 from holding SkyWest or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SkyWest vs. Townsquare Media
Performance |
| Timeline |
| SkyWest |
| Townsquare Media |
SkyWest and Townsquare Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SkyWest and Townsquare Media
The main advantage of trading using opposite SkyWest and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SkyWest 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.| SkyWest vs. Copa Holdings SA | SkyWest vs. Sun Country Airlines | SkyWest vs. Air Transport Services | SkyWest vs. Frontier Group Holdings |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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