Correlation Between Genius Sports and MediaAlpha

Can any of the company-specific risk be diversified away by investing in both Genius Sports 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 Genius Sports and MediaAlpha into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Genius Sports and MediaAlpha, you can compare the effects of market volatilities on Genius Sports 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 Genius Sports with a short position of MediaAlpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genius Sports and MediaAlpha.

Diversification Opportunities for Genius Sports and MediaAlpha

-0.16

Correlation Coefficient

Genius Sports  MediaAlpha

Good diversification

The 3 months correlation between Genius and MediaAlpha is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Genius Sports and MediaAlpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaAlpha and Genius Sports 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 Genius Sports 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 Genius Sports i.e., Genius Sports and MediaAlpha go up and down completely randomly.

Pair Corralation between Genius Sports and MediaAlpha

Given the investment horizon of 90 days Genius Sports is expected to generate 0.85 times more return on investment than MediaAlpha. However, Genius Sports is 1.18 times less risky than MediaAlpha. It trades about 0.09 of its potential returns per unit of risk. MediaAlpha is currently generating about -0.05 per unit of risk. If you would invest  862.00  in Genius Sports on December 30, 2024 and sell it today you would earn a total of  153.00  from holding Genius Sports or generate 17.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Genius Sports  vs.  MediaAlpha

Genius Sports

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genius Sports are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Genius Sports demonstrated solid returns over the last few months and may actually be approaching a breakup point.

MediaAlpha

Risk-Adjusted Performance

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 latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Genius Sports and MediaAlpha

The main advantage of trading using opposite Genius Sports and MediaAlpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genius Sports 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.

The idea behind Genius Sports and MediaAlpha 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 Commodity Directory module to find actively traded commodities issued by global exchanges.