Correlation Between Digital Ally and MediaAlpha
Can any of the company-specific risk be diversified away by investing in both Digital Ally 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 Digital Ally and MediaAlpha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital Ally and MediaAlpha, you can compare the effects of market volatilities on Digital Ally 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 Digital Ally with a short position of MediaAlpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Ally and MediaAlpha.
Diversification Opportunities for Digital Ally and MediaAlpha
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Digital and MediaAlpha is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Digital Ally and MediaAlpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaAlpha and Digital Ally 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 Digital Ally 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 Digital Ally i.e., Digital Ally and MediaAlpha go up and down completely randomly.
Pair Corralation between Digital Ally and MediaAlpha
Given the investment horizon of 90 days Digital Ally is expected to generate 1.6 times more return on investment than MediaAlpha. However, Digital Ally is 1.6 times more volatile than MediaAlpha. It trades about 0.04 of its potential returns per unit of risk. MediaAlpha is currently generating about -0.2 per unit of risk. If you would invest 101.00 in Digital Ally on August 24, 2024 and sell it today you would lose (4.00) from holding Digital Ally or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital Ally vs. MediaAlpha
Performance |
| Timeline |
| Digital Ally |
| MediaAlpha |
Digital Ally and MediaAlpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital Ally and MediaAlpha
The main advantage of trading using opposite Digital Ally and MediaAlpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital Ally 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.| Digital Ally vs. Zedge Inc | Digital Ally vs. 36Kr Holdings | Digital Ally vs. MediaAlpha | Digital Ally vs. Vivid Seats |
| MediaAlpha vs. Asset Entities Class | MediaAlpha vs. Yelp Inc | MediaAlpha vs. BuzzFeed | MediaAlpha vs. Vivid Seats |
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 the Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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