Correlation Between Townsquare Media and Balchem
Can any of the company-specific risk be diversified away by investing in both Townsquare Media and Balchem 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 Townsquare Media and Balchem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Townsquare Media and Balchem, you can compare the effects of market volatilities on Townsquare Media and Balchem 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 Townsquare Media with a short position of Balchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and Balchem.
Diversification Opportunities for Townsquare Media and Balchem
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Townsquare and Balchem is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Balchem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balchem and Townsquare Media 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 Townsquare Media are associated (or correlated) with Balchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balchem has no effect on the direction of Townsquare Media i.e., Townsquare Media and Balchem go up and down completely randomly.
Pair Corralation between Townsquare Media and Balchem
Considering the 90-day investment horizon Townsquare Media is expected to under-perform the Balchem. In addition to that, Townsquare Media is 2.27 times more volatile than Balchem. It trades about -0.11 of its total potential returns per unit of risk. Balchem is currently generating about -0.03 per unit of volatility. If you would invest 16,447 in Balchem on October 24, 2024 and sell it today you would lose (144.00) from holding Balchem or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Townsquare Media vs. Balchem
Performance |
| Timeline |
| Townsquare Media |
| Balchem |
Townsquare Media and Balchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Townsquare Media and Balchem
The main advantage of trading using opposite Townsquare Media and Balchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Townsquare Media position performs unexpectedly, Balchem 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 Balchem will offset losses from the drop in Balchem's long position.| Townsquare Media vs. Mirriad Advertising plc | Townsquare Media vs. INEO Tech Corp | Townsquare Media vs. Kidoz Inc | Townsquare Media vs. Marchex |
| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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