Correlation Between Navient Corp and Medallion Financial

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

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

Diversification Opportunities for Navient Corp and Medallion Financial

-0.19

Correlation Coefficient

Navient Corp  Medallion Financial

Good diversification

The 3 months correlation between Navient and Medallion is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Navient Corp 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 Navient Corp 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 Navient Corp 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 Navient Corp i.e., Navient Corp and Medallion Financial go up and down completely randomly.

Pair Corralation between Navient Corp and Medallion Financial

Given the investment horizon of 90 days Navient Corp is expected to generate 0.85 times more return on investment than Medallion Financial. However, Navient Corp is 1.17 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 0.0 per unit of risk. If you would invest  1,283  in Navient Corp on December 30, 2024 and sell it today you would lose (1.00) from holding Navient Corp or give up 0.08% of portfolio value over 90 days.

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

Navient Corp  vs.  Medallion Financial Corp

Navient Corp

Risk-Adjusted Performance

Very Weak

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

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 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.

Pair Trading with Navient Corp and Medallion Financial

The main advantage of trading using opposite Navient Corp and Medallion Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navient Corp 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 Navient Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.