Correlation Between MediaAlpha and Genius Sports

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

Diversification Opportunities for MediaAlpha and Genius Sports

-0.64
  Correlation Coefficient

Excellent diversification

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

Pair Corralation between MediaAlpha and Genius Sports

Considering the 90-day investment horizon MediaAlpha is expected to under-perform the Genius Sports. In addition to that, MediaAlpha is 1.6 times more volatile than Genius Sports. It trades about -0.2 of its total potential returns per unit of risk. Genius Sports is currently generating about 0.34 per unit of volatility. If you would invest  710.00  in Genius Sports on August 30, 2024 and sell it today you would earn a total of  267.00  from holding Genius Sports or generate 37.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

MediaAlpha  vs.  Genius Sports

 Performance 
       Timeline  
MediaAlpha 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Genius Sports 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Genius Sports are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Genius Sports demonstrated solid returns over the last few months and may actually be approaching a breakup point.

MediaAlpha and Genius Sports Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MediaAlpha and Genius Sports

The main advantage of trading using opposite MediaAlpha and Genius Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaAlpha position performs unexpectedly, Genius Sports 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 Genius Sports will offset losses from the drop in Genius Sports' long position.
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The idea behind MediaAlpha and Genius Sports 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 CEOs Directory module to screen CEOs from public companies around the world.

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