Correlation Between Townsquare Media and Procter Gamble

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

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

Diversification Opportunities for Townsquare Media and Procter Gamble

0.38

Correlation Coefficient

Townsquare Media  Procter Gamble

Weak diversification

The 3 months correlation between Townsquare and Procter is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble 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 Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Townsquare Media i.e., Townsquare Media and Procter Gamble go up and down completely randomly.

Pair Corralation between Townsquare Media and Procter Gamble

Considering the 90-day investment horizon Townsquare Media is expected to generate 2.79 times more return on investment than Procter Gamble. However, Townsquare Media is 2.79 times more volatile than Procter Gamble. It trades about 0.04 of its potential returns per unit of risk. Procter Gamble is currently generating about 0.04 per unit of risk. If you would invest  667.00  in Townsquare Media on October 11, 2024 and sell it today you would earn a total of  266.00  from holding Townsquare Media or generate 39.88% return on investment over 90 days.

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

Townsquare Media  vs.  Procter Gamble

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 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.

Procter Gamble

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Procter Gamble has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Townsquare Media and Procter Gamble

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

The idea behind Townsquare Media and Procter Gamble 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.