Correlation Between TOWNSQUARE MEDIA and TITAN MACHINERY

Can any of the company-specific risk be diversified away by investing in both TOWNSQUARE MEDIA and TITAN MACHINERY 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 TITAN MACHINERY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TOWNSQUARE MEDIA INC and TITAN MACHINERY, you can compare the effects of market volatilities on TOWNSQUARE MEDIA and TITAN MACHINERY 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 TITAN MACHINERY. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOWNSQUARE MEDIA and TITAN MACHINERY.

Diversification Opportunities for TOWNSQUARE MEDIA and TITAN MACHINERY

0.5

Correlation Coefficient

TOWNSQUARE MEDIA  TITAN MACHINERY

Very weak diversification

The 3 months correlation between TOWNSQUARE and TITAN is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding TOWNSQUARE MEDIA INC and TITAN MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TITAN MACHINERY 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 INC are associated (or correlated) with TITAN MACHINERY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TITAN MACHINERY has no effect on the direction of TOWNSQUARE MEDIA i.e., TOWNSQUARE MEDIA and TITAN MACHINERY go up and down completely randomly.

Pair Corralation between TOWNSQUARE MEDIA and TITAN MACHINERY

Assuming the 90 days trading horizon TOWNSQUARE MEDIA INC is expected to generate 0.8 times more return on investment than TITAN MACHINERY. However, TOWNSQUARE MEDIA INC is 1.25 times less risky than TITAN MACHINERY. It trades about 0.04 of its potential returns per unit of risk. TITAN MACHINERY is currently generating about -0.05 per unit of risk. If you would invest  590.00  in TOWNSQUARE MEDIA INC on October 4, 2024 and sell it today you would earn a total of  290.00  from holding TOWNSQUARE MEDIA INC or generate 49.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

TOWNSQUARE MEDIA INC  vs.  TITAN MACHINERY

TOWNSQUARE MEDIA INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOWNSQUARE MEDIA INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TOWNSQUARE MEDIA is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

TITAN MACHINERY

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TITAN MACHINERY are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, TITAN MACHINERY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with TOWNSQUARE MEDIA and TITAN MACHINERY

The main advantage of trading using opposite TOWNSQUARE MEDIA and TITAN MACHINERY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOWNSQUARE MEDIA position performs unexpectedly, TITAN MACHINERY 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 TITAN MACHINERY will offset losses from the drop in TITAN MACHINERY's long position.

The idea behind TOWNSQUARE MEDIA INC and TITAN MACHINERY pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.