Correlation Between MediaAlpha and Outbrain

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

Diversification Opportunities for MediaAlpha and Outbrain

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between MediaAlpha and Outbrain is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding MediaAlpha and Outbrain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outbrain 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 Outbrain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outbrain has no effect on the direction of MediaAlpha i.e., MediaAlpha and Outbrain go up and down completely randomly.

Pair Corralation between MediaAlpha and Outbrain

Considering the 90-day investment horizon MediaAlpha is expected to under-perform the Outbrain. In addition to that, MediaAlpha is 2.48 times more volatile than Outbrain. It trades about -0.21 of its total potential returns per unit of risk. Outbrain is currently generating about 0.28 per unit of volatility. If you would invest  439.00  in Outbrain on August 27, 2024 and sell it today you would earn a total of  81.00  from holding Outbrain or generate 18.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

MediaAlpha  vs.  Outbrain

 Performance 
       Timeline  
MediaAlpha 

Risk-Adjusted Performance

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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 fragile 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.
Outbrain 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Outbrain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Outbrain is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

MediaAlpha and Outbrain Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MediaAlpha and Outbrain

The main advantage of trading using opposite MediaAlpha and Outbrain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaAlpha position performs unexpectedly, Outbrain 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 Outbrain will offset losses from the drop in Outbrain's long position.
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The idea behind MediaAlpha and Outbrain 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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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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