Correlation Between Mill City and Medallion Financial

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

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

Diversification Opportunities for Mill City and Medallion Financial

0.4

Correlation Coefficient

Mill City  Medallion Financial

Very weak diversification

The 3 months correlation between Mill and Medallion is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and Medallion Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medallion Financial Corp and Mill City 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 Mill City Ventures are associated (or correlated) with Medallion Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medallion Financial Corp has no effect on the direction of Mill City i.e., Mill City and Medallion Financial go up and down completely randomly.

Pair Corralation between Mill City and Medallion Financial

Given the investment horizon of 90 days Mill City Ventures is expected to generate 3.64 times more return on investment than Medallion Financial. However, Mill City is 3.64 times more volatile than Medallion Financial Corp. It trades about 0.02 of its potential returns per unit of risk. Medallion Financial Corp is currently generating about -0.05 per unit of risk. If you would invest  199.00  in Mill City Ventures on December 20, 2024 and sell it today you would lose (12.00) from holding Mill City Ventures or give up 6.03% of portfolio value over 90 days.

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

Mill City Ventures  vs.  Medallion Financial Corp

Mill City Ventures

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mill City Ventures are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mill City may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Medallion Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medallion Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Mill City and Medallion Financial

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

The idea behind Mill City Ventures and Medallion Financial Corp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.