Correlation Between Opera and MediaAlpha

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

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

Diversification Opportunities for Opera and MediaAlpha

0.74

Correlation Coefficient

Opera  MediaAlpha

Poor diversification

The 3 months correlation between Opera and MediaAlpha is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Opera and MediaAlpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediaAlpha and Opera 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 Opera 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 Opera i.e., Opera and MediaAlpha go up and down completely randomly.

Pair Corralation between Opera and MediaAlpha

Given the investment horizon of 90 days Opera is expected to generate 0.79 times more return on investment than MediaAlpha. However, Opera is 1.26 times less risky than MediaAlpha. It trades about -0.05 of its potential returns per unit of risk. MediaAlpha is currently generating about -0.05 per unit of risk. If you would invest  1,852  in Opera on December 29, 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

Opera  vs.  MediaAlpha

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.

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 fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Opera and MediaAlpha

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

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.