Correlation Between Digimarc and MediaAlpha

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

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

Diversification Opportunities for Digimarc and MediaAlpha

0.82

Correlation Coefficient

Digimarc  MediaAlpha

Very poor diversification

The 3 months correlation between Digimarc and MediaAlpha is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and MediaAlpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaAlpha and Digimarc 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 Digimarc 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 Digimarc i.e., Digimarc and MediaAlpha go up and down completely randomly.

Pair Corralation between Digimarc and MediaAlpha

Given the investment horizon of 90 days Digimarc is expected to generate 2.63 times less return on investment than MediaAlpha. In addition to that, Digimarc is 1.13 times more volatile than MediaAlpha. It trades about 0.15 of its total potential returns per unit of risk. MediaAlpha is currently generating about 0.43 per unit of volatility. If you would invest  749.00  in MediaAlpha on February 14, 2025 and sell it today you would earn a total of  307.00  from holding MediaAlpha or generate 40.99% return on investment over 90 days.

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

Digimarc  vs.  MediaAlpha

Digimarc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digimarc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MediaAlpha

Risk-Adjusted Performance

Very Weak

Over the last 90 days MediaAlpha has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Digimarc and MediaAlpha

The main advantage of trading using opposite Digimarc and MediaAlpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digimarc 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 Digimarc 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.