Correlation Between MediaAlpha and Asset Entities

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

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

Diversification Opportunities for MediaAlpha and Asset Entities

0.34

Correlation Coefficient

MediaAlpha  Asset Entities

Weak diversification

The 3 months correlation between MediaAlpha and Asset is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding MediaAlpha and Asset Entities Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asset Entities Class and MediaAlpha 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 MediaAlpha are associated (or correlated) with Asset Entities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asset Entities Class has no effect on the direction of MediaAlpha i.e., MediaAlpha and Asset Entities go up and down completely randomly.

Pair Corralation between MediaAlpha and Asset Entities

Considering the 90-day investment horizon MediaAlpha is expected to under-perform the Asset Entities. But the stock apears to be less risky and, when comparing its historical volatility, MediaAlpha is 4.12 times less risky than Asset Entities. The stock trades about -0.08 of its potential returns per unit of risk. The Asset Entities Class is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  54.00  in Asset Entities Class on January 10, 2025 and sell it today you would lose (6.00) from holding Asset Entities Class or give up 11.11% of portfolio value over 90 days.

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

MediaAlpha  vs.  Asset Entities Class

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 inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Asset Entities Class

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asset Entities Class are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Asset Entities unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MediaAlpha and Asset Entities

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

The idea behind MediaAlpha and Asset Entities Class 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.