Correlation Between Townsquare Media and Criteo Sa

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

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

Diversification Opportunities for Townsquare Media and Criteo Sa

0.62

Correlation Coefficient

Townsquare Media  Criteo Sa

Poor diversification

The 3 months correlation between Townsquare and Criteo is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Criteo Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Criteo Sa 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 Criteo Sa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Criteo Sa has no effect on the direction of Townsquare Media i.e., Townsquare Media and Criteo Sa go up and down completely randomly.

Pair Corralation between Townsquare Media and Criteo Sa

Considering the 90-day investment horizon Townsquare Media is expected to under-perform the Criteo Sa. But the stock apears to be less risky and, when comparing its historical volatility, Townsquare Media is 1.45 times less risky than Criteo Sa. The stock trades about -0.07 of its potential returns per unit of risk. The Criteo Sa is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,927  in Criteo Sa on December 30, 2024 and sell it today you would lose (425.00) from holding Criteo Sa or give up 10.82% of portfolio value over 90 days.

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

Townsquare Media  vs.  Criteo Sa

Townsquare Media

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Criteo Sa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Criteo Sa has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Townsquare Media and Criteo Sa

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

The idea behind Townsquare Media and Criteo Sa 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.