Correlation Between Tiptree and Townsquare Media

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

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

Diversification Opportunities for Tiptree and Townsquare Media

-0.01

Correlation Coefficient

Tiptree  Townsquare Media

Good diversification

The 3 months correlation between Tiptree and Townsquare is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Tiptree and Townsquare Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Townsquare Media and Tiptree 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 Tiptree 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 Tiptree i.e., Tiptree and Townsquare Media go up and down completely randomly.

Pair Corralation between Tiptree and Townsquare Media

Given the investment horizon of 90 days Tiptree is expected to under-perform the Townsquare Media. But the stock apears to be less risky and, when comparing its historical volatility, Tiptree is 1.08 times less risky than Townsquare Media. The stock trades about -0.01 of its potential returns per unit of risk. The Townsquare Media is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  667.00  in Townsquare Media on May 4, 2025 and sell it today you would earn a total of  18.00  from holding Townsquare Media or generate 2.7% return on investment over 90 days.

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

Tiptree  vs.  Townsquare Media

Tiptree

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tiptree has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Tiptree is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Townsquare Media

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Townsquare Media are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Townsquare Media is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Tiptree and Townsquare Media

The main advantage of trading using opposite Tiptree and Townsquare Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiptree 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 Tiptree 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.