Correlation Between Upstart Holdings and Medallion Financial

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

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

Diversification Opportunities for Upstart Holdings and Medallion Financial

-0.25

Correlation Coefficient

Upstart Holdings  Medallion Financial

Very good diversification

The 3 months correlation between Upstart and Medallion is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Upstart Holdings 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 Upstart Holdings 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 Upstart Holdings 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 Upstart Holdings i.e., Upstart Holdings and Medallion Financial go up and down completely randomly.

Pair Corralation between Upstart Holdings and Medallion Financial

Given the investment horizon of 90 days Upstart Holdings is expected to under-perform the Medallion Financial. In addition to that, Upstart Holdings is 2.88 times more volatile than Medallion Financial Corp. It trades about -0.04 of its total potential returns per unit of risk. Medallion Financial Corp is currently generating about 0.0 per unit of volatility. If you would invest  923.00  in Medallion Financial Corp on December 29, 2024 and sell it today you would lose (17.00) from holding Medallion Financial Corp or give up 1.84% of portfolio value over 90 days.

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

Upstart Holdings  vs.  Medallion Financial Corp

Upstart Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Upstart Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 Upstart Holdings and Medallion Financial

The main advantage of trading using opposite Upstart Holdings and Medallion Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Upstart Holdings 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 Upstart Holdings 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.