Correlation Between CNFinance Holdings and Medallion Financial

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Can any of the company-specific risk be diversified away by investing in both CNFinance 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 CNFinance 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 CNFinance Holdings and Medallion Financial Corp, you can compare the effects of market volatilities on CNFinance 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 CNFinance Holdings with a short position of Medallion Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNFinance Holdings and Medallion Financial.

Diversification Opportunities for CNFinance Holdings and Medallion Financial

CNFinanceMedallionDiversified AwayCNFinanceMedallionDiversified Away100%
-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between CNFinance and Medallion is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding CNFinance 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 CNFinance 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 CNFinance 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 CNFinance Holdings i.e., CNFinance Holdings and Medallion Financial go up and down completely randomly.

Pair Corralation between CNFinance Holdings and Medallion Financial

Considering the 90-day investment horizon CNFinance Holdings is expected to under-perform the Medallion Financial. In addition to that, CNFinance Holdings is 1.98 times more volatile than Medallion Financial Corp. It trades about 0.0 of its total potential returns per unit of risk. Medallion Financial Corp is currently generating about 0.02 per unit of volatility. If you would invest  752.00  in Medallion Financial Corp on November 29, 2024 and sell it today you would earn a total of  64.00  from holding Medallion Financial Corp or generate 8.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

CNFinance Holdings  vs.  Medallion Financial Corp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-1001020
JavaScript chart by amCharts 3.21.15CNF MFIN
       Timeline  
CNFinance Holdings 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in CNFinance Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, CNFinance Holdings reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.80.911.11.21.3
Medallion Financial Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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 inconsistent performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb88.599.51010.5

CNFinance Holdings and Medallion Financial Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-17.32-12.97-8.62-4.280.04.58.9913.4917.98 0.020.040.060.08
JavaScript chart by amCharts 3.21.15CNF MFIN
       Returns  

Pair Trading with CNFinance Holdings and Medallion Financial

The main advantage of trading using opposite CNFinance Holdings and Medallion Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNFinance 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 CNFinance 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.
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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