Correlation Between TOWNSQUARE MEDIA and Dillards

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

Diversification Opportunities for TOWNSQUARE MEDIA and Dillards

-0.46

Correlation Coefficient

TOWNSQUARE MEDIA  Dillards

Very good diversification

The 3 months correlation between TOWNSQUARE and Dillards is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding TOWNSQUARE MEDIA INC and Dillards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards 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 Dillards. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards has no effect on the direction of TOWNSQUARE MEDIA i.e., TOWNSQUARE MEDIA and Dillards go up and down completely randomly.

Pair Corralation between TOWNSQUARE MEDIA and Dillards

Assuming the 90 days trading horizon TOWNSQUARE MEDIA INC is expected to generate 1.02 times more return on investment than Dillards. However, TOWNSQUARE MEDIA is 1.02 times more volatile than Dillards. It trades about 0.05 of its potential returns per unit of risk. Dillards is currently generating about 0.04 per unit of risk. If you would invest  568.00  in TOWNSQUARE MEDIA INC on October 24, 2024 and sell it today you would earn a total of  307.00  from holding TOWNSQUARE MEDIA INC or generate 54.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

TOWNSQUARE MEDIA INC  vs.  Dillards

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Dillards

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dillards reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TOWNSQUARE MEDIA and Dillards

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

The idea behind TOWNSQUARE MEDIA INC and Dillards 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.