Correlation Between Townsquare Media and Lipocine
Can any of the company-specific risk be diversified away by investing in both Townsquare Media and Lipocine 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 Lipocine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Townsquare Media and Lipocine, you can compare the effects of market volatilities on Townsquare Media and Lipocine 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 Lipocine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and Lipocine.
Diversification Opportunities for Townsquare Media and Lipocine
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Townsquare and Lipocine is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine 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 Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of Townsquare Media i.e., Townsquare Media and Lipocine go up and down completely randomly.
Pair Corralation between Townsquare Media and Lipocine
Considering the 90-day investment horizon Townsquare Media is expected to under-perform the Lipocine. But the stock apears to be less risky and, when comparing its historical volatility, Townsquare Media is 3.51 times less risky than Lipocine. The stock trades about -0.57 of its potential returns per unit of risk. The Lipocine is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 350.00 in Lipocine on December 10, 2024 and sell it today you would lose (30.00) from holding Lipocine or give up 8.57% 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. Lipocine
Performance |
| Timeline |
| Townsquare Media |
| Lipocine |
Townsquare Media and Lipocine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Townsquare Media and Lipocine
The main advantage of trading using opposite Townsquare Media and Lipocine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Townsquare Media position performs unexpectedly, Lipocine 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 Lipocine will offset losses from the drop in Lipocine'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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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