Correlation Between MediaAlpha and Opera

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

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

Diversification Opportunities for MediaAlpha and Opera

0.74

Correlation Coefficient

MediaAlpha  Opera

Poor diversification

The 3 months correlation between MediaAlpha and Opera is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding MediaAlpha and Opera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Opera 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 Opera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Opera has no effect on the direction of MediaAlpha i.e., MediaAlpha and Opera go up and down completely randomly.

Pair Corralation between MediaAlpha and Opera

Considering the 90-day investment horizon MediaAlpha is expected to under-perform the Opera. In addition to that, MediaAlpha is 1.26 times more volatile than Opera. It trades about -0.05 of its total potential returns per unit of risk. Opera is currently generating about -0.05 per unit of volatility. If you would invest  1,852  in Opera on December 30, 2024 and sell it today you would lose (234.00) from holding Opera or give up 12.63% of portfolio value over 90 days.

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

MediaAlpha  vs.  Opera

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.

Opera

Risk-Adjusted Performance

Very Weak

Over the last 90 days Opera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating 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 MediaAlpha and Opera

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

The idea behind MediaAlpha and Opera 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 Transaction History module to view history of all your transactions and understand their impact on performance.