Correlation Between Townsquare Media and Nidec

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

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

Diversification Opportunities for Townsquare Media and Nidec

-0.02

Correlation Coefficient

Townsquare Media  Nidec

Good diversification

The 3 months correlation between Townsquare and Nidec is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Nidec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidec 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 Nidec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidec has no effect on the direction of Townsquare Media i.e., Townsquare Media and Nidec go up and down completely randomly.

Pair Corralation between Townsquare Media and Nidec

Assuming the 90 days horizon Townsquare Media is expected to under-perform the Nidec. In addition to that, Townsquare Media is 1.57 times more volatile than Nidec. It trades about -0.09 of its total potential returns per unit of risk. Nidec is currently generating about 0.0 per unit of volatility. If you would invest  426.00  in Nidec on October 11, 2024 and sell it today you would lose (2.00) from holding Nidec or give up 0.47% of portfolio value over 90 days.

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

Townsquare Media  vs.  Nidec

Townsquare Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Townsquare Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Townsquare Media is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Nidec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nidec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Nidec is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Townsquare Media and Nidec

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

The idea behind Townsquare Media and Nidec 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 Stocks Directory module to find actively traded stocks across global markets.