Correlation Between TOWNSQUARE MEDIA and Ubisoft Entertainment

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

By analyzing existing cross correlation between TOWNSQUARE MEDIA INC and Ubisoft Entertainment SA, you can compare the effects of market volatilities on TOWNSQUARE MEDIA and Ubisoft Entertainment 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 Ubisoft Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOWNSQUARE MEDIA and Ubisoft Entertainment.

Diversification Opportunities for TOWNSQUARE MEDIA and Ubisoft Entertainment

0.39

Correlation Coefficient

TOWNSQUARE MEDIA  Ubisoft Entertainment

Weak diversification

The 3 months correlation between TOWNSQUARE and Ubisoft is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding TOWNSQUARE MEDIA INC and Ubisoft Entertainment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubisoft Entertainment 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 INC are associated (or correlated) with Ubisoft Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubisoft Entertainment has no effect on the direction of TOWNSQUARE MEDIA i.e., TOWNSQUARE MEDIA and Ubisoft Entertainment go up and down completely randomly.

Pair Corralation between TOWNSQUARE MEDIA and Ubisoft Entertainment

Assuming the 90 days trading horizon TOWNSQUARE MEDIA INC is expected to generate 0.33 times more return on investment than Ubisoft Entertainment. However, TOWNSQUARE MEDIA INC is 2.99 times less risky than Ubisoft Entertainment. It trades about 0.06 of its potential returns per unit of risk. Ubisoft Entertainment SA is currently generating about 0.01 per unit of risk. If you would invest  886.00  in TOWNSQUARE MEDIA INC on September 18, 2024 and sell it today you would earn a total of  54.00  from holding TOWNSQUARE MEDIA INC or generate 6.09% 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 INC  vs.  Ubisoft Entertainment SA

TOWNSQUARE MEDIA INC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TOWNSQUARE MEDIA INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TOWNSQUARE MEDIA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ubisoft Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TOWNSQUARE MEDIA and Ubisoft Entertainment

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

The idea behind TOWNSQUARE MEDIA INC and Ubisoft Entertainment SA 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.