Correlation Between Regional Management and Medallion Bank
Can any of the company-specific risk be diversified away by investing in both Regional Management and Medallion Bank 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 Regional Management and Medallion Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and Medallion Bank PR, you can compare the effects of market volatilities on Regional Management and Medallion Bank 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 Regional Management with a short position of Medallion Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and Medallion Bank.
Diversification Opportunities for Regional Management and Medallion Bank
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Regional and Medallion is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and Medallion Bank PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medallion Bank PR and Regional Management 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 Regional Management Corp are associated (or correlated) with Medallion Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medallion Bank PR has no effect on the direction of Regional Management i.e., Regional Management and Medallion Bank go up and down completely randomly.
Pair Corralation between Regional Management and Medallion Bank
Allowing for the 90-day total investment horizon Regional Management Corp is expected to generate 2.25 times more return on investment than Medallion Bank. However, Regional Management is 2.25 times more volatile than Medallion Bank PR. It trades about 0.27 of its potential returns per unit of risk. Medallion Bank PR is currently generating about -0.05 per unit of risk. If you would invest 2,979 in Regional Management Corp on September 13, 2024 and sell it today you would earn a total of 416.00 from holding Regional Management Corp or generate 13.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. Medallion Bank PR
Performance |
| Timeline |
| Regional Management Corp |
| Medallion Bank PR |
Regional Management and Medallion Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and Medallion Bank
The main advantage of trading using opposite Regional Management and Medallion Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management position performs unexpectedly, Medallion Bank 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 Bank will offset losses from the drop in Medallion Bank's long position.| Regional Management vs. Visa Class A | Regional Management vs. PayPal Holdings | Regional Management vs. Upstart Holdings | Regional Management vs. Mastercard |
| Medallion Bank vs. Merchants Bancorp | Medallion Bank vs. Medalist Diversified Reit | Medallion Bank vs. Northern Trust | Medallion Bank vs. First Citizens BancShares |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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