Correlation Between MediaAlpha and IAC
Can any of the company-specific risk be diversified away by investing in both MediaAlpha and IAC 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 IAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediaAlpha and IAC Inc, you can compare the effects of market volatilities on MediaAlpha and IAC 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 IAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaAlpha and IAC.
Diversification Opportunities for MediaAlpha and IAC
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MediaAlpha and IAC is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding MediaAlpha and IAC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAC Inc 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 IAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAC Inc has no effect on the direction of MediaAlpha i.e., MediaAlpha and IAC go up and down completely randomly.
Pair Corralation between MediaAlpha and IAC
Considering the 90-day investment horizon MediaAlpha is expected to under-perform the IAC. In addition to that, MediaAlpha is 2.15 times more volatile than IAC Inc. It trades about -0.22 of its total potential returns per unit of risk. IAC Inc is currently generating about -0.08 per unit of volatility. If you would invest 5,146 in IAC Inc on August 28, 2024 and sell it today you would lose (370.00) from holding IAC Inc or give up 7.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MediaAlpha vs. IAC Inc
Performance |
| Timeline |
| MediaAlpha |
| IAC Inc |
MediaAlpha and IAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediaAlpha and IAC
The main advantage of trading using opposite MediaAlpha and IAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaAlpha position performs unexpectedly, IAC 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 IAC will offset losses from the drop in IAC's long position.| MediaAlpha vs. Alphabet Inc Class C | MediaAlpha vs. Twilio Inc | MediaAlpha vs. Snap Inc | MediaAlpha vs. Baidu Inc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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