Correlation Between Meta Platforms and MediaAlpha
Can any of the company-specific risk be diversified away by investing in both Meta Platforms 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 Meta Platforms and MediaAlpha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and MediaAlpha, you can compare the effects of market volatilities on Meta Platforms 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 Meta Platforms with a short position of MediaAlpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and MediaAlpha.
Diversification Opportunities for Meta Platforms and MediaAlpha
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Meta and MediaAlpha is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and MediaAlpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaAlpha and Meta Platforms 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 Meta Platforms 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 Meta Platforms i.e., Meta Platforms and MediaAlpha go up and down completely randomly.
Pair Corralation between Meta Platforms and MediaAlpha
Given the investment horizon of 90 days Meta Platforms is expected to generate 0.57 times more return on investment than MediaAlpha. However, Meta Platforms is 1.77 times less risky than MediaAlpha. It trades about 0.14 of its potential returns per unit of risk. MediaAlpha is currently generating about 0.03 per unit of risk. If you would invest 11,359 in Meta Platforms on August 28, 2024 and sell it today you would earn a total of 45,152 from holding Meta Platforms or generate 397.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Platforms vs. MediaAlpha
Performance |
| Timeline |
| Meta Platforms |
| MediaAlpha |
Meta Platforms and MediaAlpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and MediaAlpha
The main advantage of trading using opposite Meta Platforms and MediaAlpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms 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.| Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc | Meta Platforms vs. Baidu Inc |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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