Correlation Between TOWNSQUARE MEDIA and BC IRON

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

Diversification Opportunities for TOWNSQUARE MEDIA and BC IRON

0.84

Correlation Coefficient

TOWNSQUARE MEDIA  BC IRON

Very poor diversification

The 3 months correlation between TOWNSQUARE and BC3 is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding TOWNSQUARE MEDIA INC and BC IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC IRON 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 BC IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC IRON has no effect on the direction of TOWNSQUARE MEDIA i.e., TOWNSQUARE MEDIA and BC IRON go up and down completely randomly.

Pair Corralation between TOWNSQUARE MEDIA and BC IRON

Assuming the 90 days trading horizon TOWNSQUARE MEDIA INC is expected to under-perform the BC IRON. But the stock apears to be less risky and, when comparing its historical volatility, TOWNSQUARE MEDIA INC is 1.01 times less risky than BC IRON. The stock trades about -0.14 of its potential returns per unit of risk. The BC IRON is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  15.00  in BC IRON on December 22, 2024 and sell it today you would lose (2.00) from holding BC IRON or give up 13.33% of portfolio value over 90 days.

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

TOWNSQUARE MEDIA INC  vs.  BC IRON

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 unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

BC IRON

Risk-Adjusted Performance

Very Weak

Over the last 90 days BC IRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with TOWNSQUARE MEDIA and BC IRON

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

The idea behind TOWNSQUARE MEDIA INC and BC IRON 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.