Correlation Between Townsquare Media and Interpublic Group

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

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

Diversification Opportunities for Townsquare Media and Interpublic Group

-0.63

Correlation Coefficient

Townsquare Media  Interpublic Group

Excellent diversification

The 3 months correlation between Townsquare and Interpublic is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Townsquare Media and Interpublic Group of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interpublic Group 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 Interpublic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interpublic Group has no effect on the direction of Townsquare Media i.e., Townsquare Media and Interpublic Group go up and down completely randomly.

Pair Corralation between Townsquare Media and Interpublic Group

Considering the 90-day investment horizon Townsquare Media is expected to generate 1.86 times more return on investment than Interpublic Group. However, Townsquare Media is 1.86 times more volatile than Interpublic Group of. It trades about 0.03 of its potential returns per unit of risk. Interpublic Group of is currently generating about -0.18 per unit of risk. If you would invest  1,184  in Townsquare Media on February 2, 2024 and sell it today you would earn a total of  14.00  from holding Townsquare Media or generate 1.18% return on investment over 90 days.

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

Townsquare Media  vs.  Interpublic Group of

Townsquare Media

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Townsquare Media are ranked lower than 6 (%) 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 June 2024.

Interpublic Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Interpublic Group of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Townsquare Media and Interpublic Group

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

The idea behind Townsquare Media and Interpublic Group of 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.