Correlation Between Fiverr International and MediaAlpha

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

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

Diversification Opportunities for Fiverr International and MediaAlpha

-0.76

Correlation Coefficient

Fiverr International  MediaAlpha

Pay attention - limited upside

The 3 months correlation between Fiverr and MediaAlpha is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fiverr International and MediaAlpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaAlpha and Fiverr International 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 Fiverr International are associated (or correlated) with MediaAlpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MediaAlpha has no effect on the direction of Fiverr International i.e., Fiverr International and MediaAlpha go up and down completely randomly.

Pair Corralation between Fiverr International and MediaAlpha

Given the investment horizon of 90 days Fiverr International is expected to generate 2.38 times less return on investment than MediaAlpha. But when comparing it to its historical volatility, Fiverr International is 1.22 times less risky than MediaAlpha. It trades about 0.13 of its potential returns per unit of risk. MediaAlpha is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,861  in MediaAlpha on February 7, 2024 and sell it today you would earn a total of  359.00  from holding MediaAlpha or generate 19.29% return on investment over 90 days.

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

Fiverr International  vs.  MediaAlpha

Fiverr International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fiverr International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

MediaAlpha

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MediaAlpha are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, MediaAlpha showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fiverr International and MediaAlpha

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

The idea behind Fiverr International and MediaAlpha 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.