Correlation Between Cardlytics and Townsquare Media

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

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

Diversification Opportunities for Cardlytics and Townsquare Media

0.39

Correlation Coefficient

Cardlytics  Townsquare Media

Weak diversification

The 3 months correlation between Cardlytics and Townsquare is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cardlytics and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media and Cardlytics 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 Cardlytics 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 has no effect on the direction of Cardlytics i.e., Cardlytics and Townsquare Media go up and down completely randomly.

Pair Corralation between Cardlytics and Townsquare Media

Given the investment horizon of 90 days Cardlytics is expected to under-perform the Townsquare Media. In addition to that, Cardlytics is 3.87 times more volatile than Townsquare Media. It trades about -0.1 of its total potential returns per unit of risk. Townsquare Media is currently generating about -0.17 per unit of volatility. If you would invest  1,231  in Townsquare Media on March 13, 2024 and sell it today you would lose (156.00) from holding Townsquare Media or give up 12.67% of portfolio value over 90 days.

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

Cardlytics  vs.  Townsquare Media

Cardlytics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cardlytics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent essential indicators, Cardlytics showed solid returns over the last few months and may actually be approaching a breakup point.

Townsquare Media

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Townsquare Media are ranked lower than 3 (%) 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 July 2024.

Pair Trading with Cardlytics and Townsquare Media

The main advantage of trading using opposite Cardlytics and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardlytics 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 Cardlytics and Townsquare Media 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .