Correlation Between Townsquare Media and Paramount Global

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

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

Diversification Opportunities for Townsquare Media and Paramount Global

0.15

Correlation Coefficient

Townsquare Media  Paramount Global

Average diversification

The 3 months correlation between Townsquare and Paramount is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Paramount Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global Class 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 Paramount Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Global Class has no effect on the direction of Townsquare Media i.e., Townsquare Media and Paramount Global go up and down completely randomly.

Pair Corralation between Townsquare Media and Paramount Global

Considering the 90-day investment horizon Townsquare Media is expected to generate 0.67 times more return on investment than Paramount Global. However, Townsquare Media is 1.5 times less risky than Paramount Global. It trades about 0.03 of its potential returns per unit of risk. Paramount Global Class is currently generating about -0.01 per unit of risk. If you would invest  897.00  in Townsquare Media on September 14, 2024 and sell it today you would earn a total of  120.00  from holding Townsquare Media or generate 13.38% return on investment over 90 days.

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

Townsquare Media  vs.  Paramount Global Class

Townsquare Media

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Townsquare Media are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Townsquare Media may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Paramount Global Class

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paramount Global Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Paramount Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Townsquare Media and Paramount Global

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

The idea behind Townsquare Media and Paramount Global Class 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 Global Correlations module to find global opportunities by holding instruments from different markets.