Correlation Between Townsquare Media and Contextlogic
Can any of the company-specific risk be diversified away by investing in both Townsquare Media and Contextlogic 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 Contextlogic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Townsquare Media and Contextlogic, you can compare the effects of market volatilities on Townsquare Media and Contextlogic 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 Contextlogic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and Contextlogic.
Diversification Opportunities for Townsquare Media and Contextlogic
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Townsquare and Contextlogic is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Contextlogic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contextlogic 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 Contextlogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contextlogic has no effect on the direction of Townsquare Media i.e., Townsquare Media and Contextlogic go up and down completely randomly.
Pair Corralation between Townsquare Media and Contextlogic
Considering the 90-day investment horizon Townsquare Media is expected to under-perform the Contextlogic. But the stock apears to be less risky and, when comparing its historical volatility, Townsquare Media is 1.4 times less risky than Contextlogic. The stock trades about -0.15 of its potential returns per unit of risk. The Contextlogic is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 707.00 in Contextlogic on November 25, 2024 and sell it today you would earn a total of 47.00 from holding Contextlogic or generate 6.65% 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. Contextlogic
Performance |
Timeline |
Townsquare Media |
Contextlogic |
Townsquare Media and Contextlogic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Townsquare Media and Contextlogic
The main advantage of trading using opposite Townsquare Media and Contextlogic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Townsquare Media position performs unexpectedly, Contextlogic 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 Contextlogic will offset losses from the drop in Contextlogic's long position.Townsquare Media vs. Mirriad Advertising plc | ||
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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