Correlation Between Moneygram Int and Medallion Financial

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

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

Diversification Opportunities for Moneygram Int and Medallion Financial

0.04

Correlation Coefficient

Moneygram Int  Medallion Financial

Significant diversification

The 3 months correlation between Moneygram and Medallion is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Moneygram Int 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 Moneygram Int 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 Moneygram Int 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 Moneygram Int i.e., Moneygram Int and Medallion Financial go up and down completely randomly.

Pair Corralation between Moneygram Int and Medallion Financial

Considering the 90-day investment horizon Moneygram Int is expected to generate 6.4 times less return on investment than Medallion Financial. But when comparing it to its historical volatility, Moneygram Int is 1.63 times less risky than Medallion Financial. It trades about 0.01 of its potential returns per unit of risk. Medallion Financial Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  640.00  in Medallion Financial Corp on September 23, 2024 and sell it today you would earn a total of  338.00  from holding Medallion Financial Corp or generate 52.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	21.93%
Values	Daily Returns

Moneygram Int  vs.  Medallion Financial Corp

Moneygram Int

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moneygram Int has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Moneygram Int is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Medallion Financial Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Medallion Financial Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward indicators, Medallion Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moneygram Int and Medallion Financial

The main advantage of trading using opposite Moneygram Int and Medallion Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moneygram Int 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 Moneygram Int 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.