Correlation Between Grom Social and MediaAlpha
Can any of the company-specific risk be diversified away by investing in both Grom Social 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 Grom Social and MediaAlpha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grom Social Enterprises and MediaAlpha, you can compare the effects of market volatilities on Grom Social 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 Grom Social with a short position of MediaAlpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grom Social and MediaAlpha.
Diversification Opportunities for Grom Social and MediaAlpha
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grom and MediaAlpha is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Grom Social Enterprises and MediaAlpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaAlpha and Grom Social 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 Grom Social Enterprises 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 Grom Social i.e., Grom Social and MediaAlpha go up and down completely randomly.
Pair Corralation between Grom Social and MediaAlpha
Given the investment horizon of 90 days Grom Social Enterprises is expected to under-perform the MediaAlpha. In addition to that, Grom Social is 2.3 times more volatile than MediaAlpha. It trades about -0.12 of its total potential returns per unit of risk. MediaAlpha is currently generating about 0.03 per unit of volatility. If you would invest 1,131 in MediaAlpha on August 23, 2024 and sell it today you would earn a total of 91.00 from holding MediaAlpha or generate 8.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.3% |
| Values | Daily Returns |
Grom Social Enterprises vs. MediaAlpha
Performance |
| Timeline |
| Grom Social Enterprises |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| MediaAlpha |
Grom Social and MediaAlpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grom Social and MediaAlpha
The main advantage of trading using opposite Grom Social and MediaAlpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grom Social 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.| Grom Social vs. Digital Brands Group | Grom Social vs. Paltalk | Grom Social vs. DatChat | Grom Social vs. Ensysce Biosciences |
| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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