Correlation Between Prosiebensat and TOWNSQUARE MEDIA

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

By analyzing existing cross correlation between Prosiebensat 1 Media and TOWNSQUARE MEDIA INC, you can compare the effects of market volatilities on Prosiebensat 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 Prosiebensat with a short position of TOWNSQUARE MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and TOWNSQUARE MEDIA.

Diversification Opportunities for Prosiebensat and TOWNSQUARE MEDIA

0.4

Correlation Coefficient

Prosiebensat  TOWNSQUARE MEDIA

Very weak diversification

The 3 months correlation between Prosiebensat and TOWNSQUARE is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media 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 Prosiebensat 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 Prosiebensat 1 Media 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 Prosiebensat i.e., Prosiebensat and TOWNSQUARE MEDIA go up and down completely randomly.

Pair Corralation between Prosiebensat and TOWNSQUARE MEDIA

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to under-perform the TOWNSQUARE MEDIA. In addition to that, Prosiebensat is 1.23 times more volatile than TOWNSQUARE MEDIA INC. It trades about -0.11 of its total potential returns per unit of risk. TOWNSQUARE MEDIA INC is currently generating about -0.05 per unit of volatility. If you would invest  950.00  in TOWNSQUARE MEDIA INC on October 21, 2024 and sell it today you would lose (65.00) from holding TOWNSQUARE MEDIA INC or give up 6.84% of portfolio value over 90 days.

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

Prosiebensat 1 Media  vs.  TOWNSQUARE MEDIA INC

Prosiebensat 1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosiebensat 1 Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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

Pair Trading with Prosiebensat and TOWNSQUARE MEDIA

The main advantage of trading using opposite Prosiebensat and TOWNSQUARE MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosiebensat 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 Prosiebensat 1 Media 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.