Correlation Between Fuji Media and TOWNSQUARE MEDIA

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

By analyzing existing cross correlation between Fuji Media Holdings and TOWNSQUARE MEDIA INC, you can compare the effects of market volatilities on Fuji Media and TOWNSQUARE MEDIA 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 Fuji Media with a short position of TOWNSQUARE MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fuji Media and TOWNSQUARE MEDIA.

Diversification Opportunities for Fuji Media and TOWNSQUARE MEDIA

0.26

Correlation Coefficient

Fuji Media  TOWNSQUARE MEDIA

Modest diversification

The 3 months correlation between Fuji and TOWNSQUARE is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fuji Media Holdings and TOWNSQUARE MEDIA INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOWNSQUARE MEDIA INC and Fuji 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 Fuji Media Holdings are associated (or correlated) with TOWNSQUARE MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOWNSQUARE MEDIA INC has no effect on the direction of Fuji Media i.e., Fuji Media and TOWNSQUARE MEDIA go up and down completely randomly.

Pair Corralation between Fuji Media and TOWNSQUARE MEDIA

Assuming the 90 days trading horizon Fuji Media Holdings is expected to generate 0.79 times more return on investment than TOWNSQUARE MEDIA. However, Fuji Media Holdings is 1.27 times less risky than TOWNSQUARE MEDIA. It trades about 0.02 of its potential returns per unit of risk. TOWNSQUARE MEDIA INC is currently generating about 0.0 per unit of risk. If you would invest  930.00  in Fuji Media Holdings on October 22, 2024 and sell it today you would earn a total of  110.00  from holding Fuji Media Holdings or generate 11.83% return on investment over 90 days.

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

Fuji Media Holdings  vs.  TOWNSQUARE MEDIA INC

Fuji Media Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fuji Media Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Fuji Media is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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

Pair Trading with Fuji Media and TOWNSQUARE MEDIA

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

The idea behind Fuji Media Holdings and TOWNSQUARE MEDIA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.