Correlation Between Mediaalpha Inc and Meta Platforms

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

Diversification Opportunities for Mediaalpha Inc and Meta Platforms

0.76
  Correlation Coefficient

Poor diversification

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

Pair Corralation between Mediaalpha Inc and Meta Platforms

Considering the 90-day investment horizon Mediaalpha Inc Cl is expected to under-perform the Meta Platforms. But the stock apears to be less risky and, when comparing its historical volatility, Mediaalpha Inc Cl is 1.27 times less risky than Meta Platforms. The stock trades about -0.25 of its potential returns per unit of risk. The Meta Platforms Old is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  20,573  in Meta Platforms Old on March 29, 2022 and sell it today you would lose (909.00)  from holding Meta Platforms Old or give up 4.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Mediaalpha Inc Cl  vs.  Meta Platforms Old

 Performance (%) 
      Timeline 
Mediaalpha Inc 
Mediaalpha Performance
0 of 100
Over the last 90 days Mediaalpha Inc Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Mediaalpha Price Channel

Meta Platforms Old 
Meta Platforms Performance
0 of 100
Over the last 90 days Meta Platforms Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Meta Platforms Price Channel

Mediaalpha Inc and Meta Platforms Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Mediaalpha Inc and Meta Platforms

The main advantage of trading using opposite Mediaalpha Inc and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mediaalpha Inc position performs unexpectedly, Meta Platforms 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 Meta Platforms will offset losses from the drop in Meta Platforms' long position.
The idea behind Mediaalpha Inc Cl and Meta Platforms Old 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.
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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