Correlation Between MediaAlpha and Phoenix New

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

By analyzing existing cross correlation between MediaAlpha and Phoenix New Media, you can compare the effects of market volatilities on MediaAlpha and Phoenix New 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 Phoenix New. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediaAlpha and Phoenix New.

Diversification Opportunities for MediaAlpha and Phoenix New

0.47

Correlation Coefficient

MediaAlpha  Phoenix New

Very weak diversification

The 3 months correlation between MediaAlpha and Phoenix is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding MediaAlpha and Phoenix New Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phoenix New Media 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 Phoenix New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phoenix New Media has no effect on the direction of MediaAlpha i.e., MediaAlpha and Phoenix New go up and down completely randomly.

Pair Corralation between MediaAlpha and Phoenix New

Considering the 90-day investment horizon MediaAlpha is expected to under-perform the Phoenix New. But the stock apears to be less risky and, when comparing its historical volatility, MediaAlpha is 1.12 times less risky than Phoenix New. The stock trades about -0.05 of its potential returns per unit of risk. The Phoenix New Media is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Phoenix New Media on December 30, 2024 and sell it today you would lose (12.00) from holding Phoenix New Media or give up 5.22% of portfolio value over 90 days.

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

MediaAlpha  vs.  Phoenix New Media

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.

Phoenix New Media

Risk-Adjusted Performance

Weak

Over the last 90 days Phoenix New Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Phoenix New is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MediaAlpha and Phoenix New

The main advantage of trading using opposite MediaAlpha and Phoenix New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediaAlpha position performs unexpectedly, Phoenix New 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 Phoenix New will offset losses from the drop in Phoenix New's long position.

The idea behind MediaAlpha and Phoenix New Media 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.