Correlation Between Old Market and Medallion Financial

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

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

Diversification Opportunities for Old Market and Medallion Financial

-0.44

Correlation Coefficient

Old Market  Medallion Financial

Very good diversification

The 3 months correlation between Old and Medallion is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Old Market Capital 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 Old Market 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 Old Market Capital 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 Old Market i.e., Old Market and Medallion Financial go up and down completely randomly.

Pair Corralation between Old Market and Medallion Financial

Given the investment horizon of 90 days Old Market is expected to generate 9.19 times less return on investment than Medallion Financial. In addition to that, Old Market is 1.65 times more volatile than Medallion Financial Corp. It trades about 0.01 of its total potential returns per unit of risk. Medallion Financial Corp is currently generating about 0.22 per unit of volatility. If you would invest  772.00  in Medallion Financial Corp on September 3, 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Old Market Capital  vs.  Medallion Financial Corp

Old Market Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Old Market Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Old Market is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Medallion Financial Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Medallion Financial Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent forward indicators, Medallion Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Old Market and Medallion Financial

The main advantage of trading using opposite Old Market and Medallion Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Market 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 Old Market Capital 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.