Correlation Between IAC and MediaAlpha

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

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

Diversification Opportunities for IAC and MediaAlpha

0.08

Correlation Coefficient

IAC  MediaAlpha

Significant diversification

The 3 months correlation between IAC and MediaAlpha is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding IAC Inc and MediaAlpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaAlpha and IAC 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 IAC Inc 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 IAC i.e., IAC and MediaAlpha go up and down completely randomly.

Pair Corralation between IAC and MediaAlpha

Considering the 90-day investment horizon IAC is expected to generate 2.76 times less return on investment than MediaAlpha. But when comparing it to its historical volatility, IAC Inc is 1.08 times less risky than MediaAlpha. It trades about 0.11 of its potential returns per unit of risk. MediaAlpha is currently generating about 0.29 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  392.00  from holding MediaAlpha or generate 21.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

IAC Inc  vs.  MediaAlpha

IAC Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IAC Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, IAC may actually be approaching a critical reversion point that can send shares even higher in June 2024.

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 IAC and MediaAlpha

The main advantage of trading using opposite IAC and MediaAlpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IAC 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 IAC Inc 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.