Correlation Between MediaAlpha and Ubiquiti Networks

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

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

Diversification Opportunities for MediaAlpha and Ubiquiti Networks

-0.41

Correlation Coefficient

MediaAlpha  Ubiquiti Networks

Very good diversification

The 3 months correlation between MediaAlpha and Ubiquiti is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding MediaAlpha and Ubiquiti Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubiquiti Networks 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 Ubiquiti Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubiquiti Networks has no effect on the direction of MediaAlpha i.e., MediaAlpha and Ubiquiti Networks go up and down completely randomly.

Pair Corralation between MediaAlpha and Ubiquiti Networks

Considering the 90-day investment horizon MediaAlpha is expected to generate 1.22 times more return on investment than Ubiquiti Networks. However, MediaAlpha is 1.22 times more volatile than Ubiquiti Networks. It trades about 0.11 of its potential returns per unit of risk. Ubiquiti Networks is currently generating about -0.01 per unit of risk. If you would invest  900.00  in MediaAlpha on March 5, 2024 and sell it today you would earn a total of  878.00  from holding MediaAlpha or generate 97.56% return on investment over 90 days.

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

MediaAlpha  vs.  Ubiquiti Networks

MediaAlpha

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Ubiquiti Networks

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ubiquiti Networks are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Ubiquiti Networks demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MediaAlpha and Ubiquiti Networks

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

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