Correlation Between TOWNSQUARE MEDIA and Humana

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

Diversification Opportunities for TOWNSQUARE MEDIA and Humana

0.13

Correlation Coefficient

TOWNSQUARE MEDIA  Humana

Average diversification

The 3 months correlation between TOWNSQUARE and Humana is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding TOWNSQUARE MEDIA INC and Humana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humana Inc 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 Humana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humana Inc has no effect on the direction of TOWNSQUARE MEDIA i.e., TOWNSQUARE MEDIA and Humana go up and down completely randomly.

Pair Corralation between TOWNSQUARE MEDIA and Humana

Assuming the 90 days trading horizon TOWNSQUARE MEDIA is expected to generate 3.33 times less return on investment than Humana. But when comparing it to its historical volatility, TOWNSQUARE MEDIA INC is 1.81 times less risky than Humana. It trades about 0.05 of its potential returns per unit of risk. Humana Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  21,952  in Humana Inc on October 9, 2024 and sell it today you would earn a total of  3,368  from holding Humana Inc or generate 15.34% 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.  Humana Inc

TOWNSQUARE MEDIA INC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TOWNSQUARE MEDIA INC are ranked lower than 3 (%) 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.

Humana Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Humana Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Humana reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TOWNSQUARE MEDIA and Humana

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

The idea behind TOWNSQUARE MEDIA INC and Humana Inc 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.