Correlation Between Townsquare Media and Ameriprise Financial

Can any of the company-specific risk be diversified away by investing in both Townsquare Media and Ameriprise Financial 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 Ameriprise Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Townsquare Media and Ameriprise Financial, you can compare the effects of market volatilities on Townsquare Media and Ameriprise Financial 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 Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Townsquare Media and Ameriprise Financial.

Diversification Opportunities for Townsquare Media and Ameriprise Financial

0.56

Correlation Coefficient

Townsquare Media  Ameriprise Financial

Very weak diversification

The 3 months correlation between Townsquare and Ameriprise is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial 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 are associated (or correlated) with Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Townsquare Media i.e., Townsquare Media and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Townsquare Media and Ameriprise Financial

Assuming the 90 days horizon Townsquare Media is expected to generate 9.71 times less return on investment than Ameriprise Financial. But when comparing it to its historical volatility, Townsquare Media is 1.1 times less risky than Ameriprise Financial. It trades about 0.03 of its potential returns per unit of risk. Ameriprise Financial is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  39,714  in Ameriprise Financial on September 4, 2024 and sell it today you would earn a total of  13,986  from holding Ameriprise Financial or generate 35.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Townsquare Media  vs.  Ameriprise Financial

Townsquare Media

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Townsquare Media are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Townsquare Media is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Ameriprise Financial

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriprise Financial are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ameriprise Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Townsquare Media and Ameriprise Financial

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

The idea behind Townsquare Media and Ameriprise Financial 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.