Correlation Between TOWNSQUARE MEDIA and Boston Properties

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

Diversification Opportunities for TOWNSQUARE MEDIA and Boston Properties

0.6

Correlation Coefficient

TOWNSQUARE MEDIA  Boston Properties

Poor diversification

The 3 months correlation between TOWNSQUARE and Boston is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding TOWNSQUARE MEDIA INC and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties 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 Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Properties has no effect on the direction of TOWNSQUARE MEDIA i.e., TOWNSQUARE MEDIA and Boston Properties go up and down completely randomly.

Pair Corralation between TOWNSQUARE MEDIA and Boston Properties

Assuming the 90 days trading horizon TOWNSQUARE MEDIA INC is expected to generate 1.11 times more return on investment than Boston Properties. However, TOWNSQUARE MEDIA is 1.11 times more volatile than Boston Properties. It trades about -0.05 of its potential returns per unit of risk. Boston Properties is currently generating about -0.34 per unit of risk. If you would invest  935.00  in TOWNSQUARE MEDIA INC on October 10, 2024 and sell it today you would lose (25.00) from holding TOWNSQUARE MEDIA INC or give up 2.67% of portfolio value over 90 days.

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

TOWNSQUARE MEDIA INC  vs.  Boston Properties

TOWNSQUARE MEDIA INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TOWNSQUARE MEDIA INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, TOWNSQUARE MEDIA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Boston Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with TOWNSQUARE MEDIA and Boston Properties

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

The idea behind TOWNSQUARE MEDIA INC and Boston Properties 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.