Correlation Between Townsquare Media and Group 1
Can any of the company-specific risk be diversified away by investing in both Townsquare Media and Group 1 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 Group 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Townsquare Media and Group 1 Automotive, you can compare the effects of market volatilities on Townsquare Media and Group 1 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 Group 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and Group 1.
Diversification Opportunities for Townsquare Media and Group 1
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Townsquare and Group is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Group 1 Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 1 Automotive 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 Group 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 1 Automotive has no effect on the direction of Townsquare Media i.e., Townsquare Media and Group 1 go up and down completely randomly.
Pair Corralation between Townsquare Media and Group 1
Considering the 90-day investment horizon Townsquare Media is expected to generate 2.14 times less return on investment than Group 1. In addition to that, Townsquare Media is 1.3 times more volatile than Group 1 Automotive. It trades about 0.03 of its total potential returns per unit of risk. Group 1 Automotive is currently generating about 0.1 per unit of volatility. If you would invest 20,675 in Group 1 Automotive on November 1, 2024 and sell it today you would earn a total of 25,560 from holding Group 1 Automotive or generate 123.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Townsquare Media vs. Group 1 Automotive
Performance |
| Timeline |
| Townsquare Media |
| Group 1 Automotive |
Townsquare Media and Group 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Townsquare Media and Group 1
The main advantage of trading using opposite Townsquare Media and Group 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Townsquare Media position performs unexpectedly, Group 1 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 Group 1 will offset losses from the drop in Group 1's long position.| Townsquare Media vs. Mirriad Advertising plc | Townsquare Media vs. INEO Tech Corp | Townsquare Media vs. Kidoz Inc | Townsquare Media vs. Marchex |
| Group 1 vs. Penske Automotive Group | Group 1 vs. Lithia Motors | Group 1 vs. AutoNation | Group 1 vs. Asbury Automotive Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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