Correlation Between MediaAlpha and Perion Network

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

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

Diversification Opportunities for MediaAlpha and Perion Network

0.72

Correlation Coefficient

MediaAlpha  Perion Network

Poor diversification

The 3 months correlation between MediaAlpha and Perion is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding MediaAlpha and Perion Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perion Network 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 Perion Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perion Network has no effect on the direction of MediaAlpha i.e., MediaAlpha and Perion Network go up and down completely randomly.

Pair Corralation between MediaAlpha and Perion Network

Considering the 90-day investment horizon MediaAlpha is expected to under-perform the Perion Network. In addition to that, MediaAlpha is 1.61 times more volatile than Perion Network. It trades about -0.05 of its total potential returns per unit of risk. Perion Network is currently generating about -0.01 per unit of volatility. If you would invest  848.00  in Perion Network on December 30, 2024 and sell it today you would lose (32.00) from holding Perion Network or give up 3.77% of portfolio value over 90 days.

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

MediaAlpha  vs.  Perion Network

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.

Perion Network

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perion Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Perion Network is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with MediaAlpha and Perion Network

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

The idea behind MediaAlpha and Perion Network 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 Channel module to use Commodity Channel Index to analyze current equity momentum.