Correlation Between Alphabet and Mediaalpha Inc

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Can any of the company-specific risk be diversified away by investing in both Alphabet and Mediaalpha Inc 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 Alphabet and Mediaalpha Inc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Cl C and Mediaalpha Inc Cl, you can compare the effects of market volatilities on Alphabet and Mediaalpha Inc 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 Alphabet with a short position of Mediaalpha Inc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Mediaalpha Inc.

Diversification Opportunities for Alphabet and Mediaalpha Inc

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Alphabet and Mediaalpha is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Cl C and Mediaalpha Inc Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mediaalpha Inc and Alphabet 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 Alphabet Cl C are associated (or correlated) with Mediaalpha Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mediaalpha Inc has no effect on the direction of Alphabet i.e., Alphabet and Mediaalpha Inc go up and down completely randomly.

Pair Corralation between Alphabet and Mediaalpha Inc

Given the investment horizon of 90 days Alphabet is expected to generate 31.46 times less return on investment than Mediaalpha Inc. But when comparing it to its historical volatility, Alphabet Cl C is 1.93 times less risky than Mediaalpha Inc. It trades about 0.01 of its potential returns per unit of risk. Mediaalpha Inc Cl is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  849.00  in Mediaalpha Inc Cl on August 28, 2022 and sell it today you would earn a total of  355.00  from holding Mediaalpha Inc Cl or generate 41.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Alphabet Cl C  vs.  Mediaalpha Inc Cl

 Performance (%) 
       Timeline  
Alphabet Cl C 
Alphabet Performance
0 of 100
Over the last 90 days Alphabet Cl C has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Alphabet Price Channel

Mediaalpha Inc 
Mediaalpha Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Mediaalpha Inc Cl are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Mediaalpha Inc showed solid returns over the last few months and may actually be approaching a breakup point.

Mediaalpha Price Channel

Alphabet and Mediaalpha Inc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alphabet and Mediaalpha Inc

The main advantage of trading using opposite Alphabet and Mediaalpha Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, Mediaalpha Inc 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 Inc will offset losses from the drop in Mediaalpha Inc's long position.
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The idea behind Alphabet Cl C and Mediaalpha Inc Cl 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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Check out your portfolio center. 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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