Correlation Between Townsquare Media and SM Investments
Can any of the company-specific risk be diversified away by investing in both Townsquare Media and SM Investments 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 SM Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Townsquare Media and SM Investments, you can compare the effects of market volatilities on Townsquare Media and SM Investments 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 SM Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and SM Investments.
Diversification Opportunities for Townsquare Media and SM Investments
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Townsquare and SVTMF is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and SM Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SM Investments 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 SM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SM Investments has no effect on the direction of Townsquare Media i.e., Townsquare Media and SM Investments go up and down completely randomly.
Pair Corralation between Townsquare Media and SM Investments
Considering the 90-day investment horizon Townsquare Media is expected to generate 1.9 times more return on investment than SM Investments. However, Townsquare Media is 1.9 times more volatile than SM Investments. It trades about 0.04 of its potential returns per unit of risk. SM Investments is currently generating about -0.24 per unit of risk. If you would invest 904.00 in Townsquare Media on October 30, 2024 and sell it today you would earn a total of 14.00 from holding Townsquare Media or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Townsquare Media vs. SM Investments
Performance |
| Timeline |
| Townsquare Media |
| SM Investments |
Townsquare Media and SM Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Townsquare Media and SM Investments
The main advantage of trading using opposite Townsquare Media and SM Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Townsquare Media position performs unexpectedly, SM Investments 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 SM Investments will offset losses from the drop in SM Investments' long position.| Townsquare Media vs. Mirriad Advertising plc | Townsquare Media vs. INEO Tech Corp | Townsquare Media vs. Kidoz Inc | Townsquare Media vs. Marchex |
| SM Investments vs. CVR Partners LP | SM Investments vs. Playtika Holding Corp | SM Investments vs. Air Products and | SM Investments vs. Chemours Co |
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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