Correlation Between TOWNSQUARE MEDIA and BOSTON BEER

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

Diversification Opportunities for TOWNSQUARE MEDIA and BOSTON BEER

0.16

Correlation Coefficient

TOWNSQUARE MEDIA  BOSTON BEER

Average diversification

The 3 months correlation between TOWNSQUARE and BOSTON is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding TOWNSQUARE MEDIA INC and BOSTON BEER A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOSTON BEER A 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 BOSTON BEER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOSTON BEER A has no effect on the direction of TOWNSQUARE MEDIA i.e., TOWNSQUARE MEDIA and BOSTON BEER go up and down completely randomly.

Pair Corralation between TOWNSQUARE MEDIA and BOSTON BEER

Assuming the 90 days trading horizon TOWNSQUARE MEDIA is expected to generate 4.33 times less return on investment than BOSTON BEER. In addition to that, TOWNSQUARE MEDIA is 1.17 times more volatile than BOSTON BEER A . It trades about 0.02 of its total potential returns per unit of risk. BOSTON BEER A is currently generating about 0.12 per unit of volatility. If you would invest  26,960  in BOSTON BEER A on October 6, 2024 and sell it today you would earn a total of  2,020  from holding BOSTON BEER A or generate 7.49% return on investment over 90 days.

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

TOWNSQUARE MEDIA INC  vs.  BOSTON BEER A

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.

BOSTON BEER A

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BOSTON BEER A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, BOSTON BEER exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TOWNSQUARE MEDIA and BOSTON BEER

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

The idea behind TOWNSQUARE MEDIA INC and BOSTON BEER A 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .