Correlation Between Townsquare Media and Disney

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

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

Diversification Opportunities for Townsquare Media and Disney

-0.23

Correlation Coefficient

Townsquare Media  Disney

Very good diversification

The 3 months correlation between Townsquare and Disney is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Townsquare Media i.e., Townsquare Media and Disney go up and down completely randomly.

Pair Corralation between Townsquare Media and Disney

Considering the 90-day investment horizon Townsquare Media is expected to generate 208.73 times less return on investment than Disney. In addition to that, Townsquare Media is 1.37 times more volatile than Walt Disney. It trades about 0.0 of its total potential returns per unit of risk. Walt Disney is currently generating about 0.23 per unit of volatility. If you would invest  9,210  in Walt Disney on October 8, 2024 and sell it today you would earn a total of  1,906  from holding Walt Disney or generate 20.69% return on investment over 90 days.

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

Townsquare Media  vs.  Walt Disney

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 relatively invariable basic indicators, Townsquare Media is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Walt Disney

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Townsquare Media and Disney

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

The idea behind Townsquare Media and Walt Disney 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..