Correlation Between News Corp and Townsquare Media

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

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

Diversification Opportunities for News Corp and Townsquare Media

-0.14

Correlation Coefficient

News Corp  Townsquare Media

Good diversification

The 3 months correlation between News and Townsquare is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding News Corp B and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media and News Corp 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 News Corp B 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 has no effect on the direction of News Corp i.e., News Corp and Townsquare Media go up and down completely randomly.

Pair Corralation between News Corp and Townsquare Media

Considering the 90-day investment horizon News Corp B is expected to generate 0.34 times more return on investment than Townsquare Media. However, News Corp B is 2.92 times less risky than Townsquare Media. It trades about -0.38 of its potential returns per unit of risk. Townsquare Media is currently generating about -0.25 per unit of risk. If you would invest  3,185  in News Corp B on October 13, 2024 and sell it today you would lose (196.00) from holding News Corp B or give up 6.15% of portfolio value over 90 days.

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

News Corp B  vs.  Townsquare Media

News Corp B

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in News Corp B are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, News Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with News Corp and Townsquare Media

The main advantage of trading using opposite News Corp and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Corp 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 News Corp B and Townsquare Media 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.