Correlation Between SLM Corp and Medallion Financial
Can any of the company-specific risk be diversified away by investing in both SLM 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 SLM 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 SLM Corp Pb and Medallion Financial Corp, you can compare the effects of market volatilities on SLM 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 SLM Corp with a short position of Medallion Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLM Corp and Medallion Financial.
Diversification Opportunities for SLM Corp and Medallion Financial
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SLM and Medallion is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding SLM Corp Pb 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 SLM 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 SLM Corp Pb 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 SLM Corp i.e., SLM Corp and Medallion Financial go up and down completely randomly.
Pair Corralation between SLM Corp and Medallion Financial
Assuming the 90 days horizon SLM Corp is expected to generate 1.7 times less return on investment than Medallion Financial. But when comparing it to its historical volatility, SLM Corp Pb is 5.72 times less risky than Medallion Financial. It trades about 0.16 of its potential returns per unit of risk. Medallion Financial Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 892.00 in Medallion Financial Corp on October 24, 2024 and sell it today you would earn a total of 40.00 from holding Medallion Financial Corp or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLM Corp Pb vs. Medallion Financial Corp
Performance |
| Timeline |
| SLM Corp Pb |
| Medallion Financial Corp |
SLM Corp and Medallion Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLM Corp and Medallion Financial
The main advantage of trading using opposite SLM Corp and Medallion Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLM 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.| SLM Corp vs. Associates First Capital | SLM Corp vs. Federal Agricultural Mortgage | SLM Corp vs. Federal Agricultural Mortgage | SLM Corp vs. Federal Agricultural Mortgage |
| Medallion Financial vs. Midland States Bancorp | Medallion Financial vs. Western New England | Medallion Financial vs. Merchants Bancorp | Medallion Financial vs. MidWestOne Financial Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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