Correlation Between Medallion Financial and Western Union
Can any of the company-specific risk be diversified away by investing in both Medallion Financial and Western Union 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 Western Union 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 Western Union Co, you can compare the effects of market volatilities on Medallion Financial and Western Union 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 Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medallion Financial and Western Union.
Diversification Opportunities for Medallion Financial and Western Union
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Medallion and Western is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Medallion Financial Corp and Western Union Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union 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 Western Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Union has no effect on the direction of Medallion Financial i.e., Medallion Financial and Western Union go up and down completely randomly.
Pair Corralation between Medallion Financial and Western Union
Given the investment horizon of 90 days Medallion Financial Corp is expected to generate 1.2 times more return on investment than Western Union. However, Medallion Financial is 1.2 times more volatile than Western Union Co. It trades about 0.22 of its potential returns per unit of risk. Western Union Co is currently generating about -0.1 per unit of risk. If you would invest 772.00 in Medallion Financial Corp on September 2, 2024 and sell it today you would earn a total of 170.00 from holding Medallion Financial Corp or generate 22.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Medallion Financial Corp vs. Western Union Co
Performance |
Timeline |
Medallion Financial Corp |
Western Union |
Medallion Financial and Western Union Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Medallion Financial and Western Union
The main advantage of trading using opposite Medallion Financial and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medallion Financial position performs unexpectedly, Western Union 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 Western Union will offset losses from the drop in Western Union's long position.Medallion Financial vs. Midland States Bancorp | Medallion Financial vs. Western New England | Medallion Financial vs. Merchants Bancorp | Medallion Financial vs. MidWestOne Financial Group |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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