Correlation Between TOWNSQUARE MEDIA and LIFENET INSURANCE

Can any of the company-specific risk be diversified away by investing in both TOWNSQUARE MEDIA and LIFENET INSURANCE 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 LIFENET INSURANCE 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 LIFENET INSURANCE CO, you can compare the effects of market volatilities on TOWNSQUARE MEDIA and LIFENET INSURANCE 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 LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOWNSQUARE MEDIA and LIFENET INSURANCE.

Diversification Opportunities for TOWNSQUARE MEDIA and LIFENET INSURANCE

0.5

Correlation Coefficient

TOWNSQUARE MEDIA  LIFENET INSURANCE

Very weak diversification

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

Pair Corralation between TOWNSQUARE MEDIA and LIFENET INSURANCE

Assuming the 90 days trading horizon TOWNSQUARE MEDIA INC is expected to generate 1.25 times more return on investment than LIFENET INSURANCE. However, TOWNSQUARE MEDIA is 1.25 times more volatile than LIFENET INSURANCE CO. It trades about -0.07 of its potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about -0.18 per unit of risk. If you would invest  904.00  in TOWNSQUARE MEDIA INC on December 2, 2024 and sell it today you would lose (94.00) from holding TOWNSQUARE MEDIA INC or give up 10.4% of portfolio value over 90 days.

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

TOWNSQUARE MEDIA INC  vs.  LIFENET INSURANCE CO

TOWNSQUARE MEDIA INC

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

LIFENET INSURANCE

Risk-Adjusted Performance

Very Weak

Over the last 90 days LIFENET INSURANCE CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with TOWNSQUARE MEDIA and LIFENET INSURANCE

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

The idea behind TOWNSQUARE MEDIA INC and LIFENET INSURANCE CO 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.

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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.