Correlation Between Medallion Financial and Mars Acquisition

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

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

Diversification Opportunities for Medallion Financial and Mars Acquisition

0.15

Correlation Coefficient

Medallion Financial  Mars Acquisition

Average diversification

The 3 months correlation between Medallion and Mars is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Medallion Financial Corp and Mars Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mars Acquisition Corp and Medallion Financial 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 Medallion Financial Corp are associated (or correlated) with Mars Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mars Acquisition Corp has no effect on the direction of Medallion Financial i.e., Medallion Financial and Mars Acquisition go up and down completely randomly.

Pair Corralation between Medallion Financial and Mars Acquisition

Given the investment horizon of 90 days Medallion Financial Corp is expected to generate 0.06 times more return on investment than Mars Acquisition. However, Medallion Financial Corp is 17.93 times less risky than Mars Acquisition. It trades about -0.02 of its potential returns per unit of risk. Mars Acquisition Corp is currently generating about -0.13 per unit of risk. If you would invest  941.00  in Medallion Financial Corp on October 22, 2024 and sell it today you would lose (9.00) from holding Medallion Financial Corp or give up 0.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	47.37%
Values	Daily Returns

Medallion Financial Corp  vs.  Mars Acquisition Corp

Medallion Financial Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Medallion Financial Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Medallion Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Mars Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mars Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Medallion Financial and Mars Acquisition

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

The idea behind Medallion Financial Corp and Mars Acquisition 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.