Correlation Between Western Union and Medallion Bank
Can any of the company-specific risk be diversified away by investing in both Western Union 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 Western Union and Medallion Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Union Co and Medallion Bank PR, you can compare the effects of market volatilities on Western Union 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 Western Union with a short position of Medallion Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Medallion Bank.
Diversification Opportunities for Western Union and Medallion Bank
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Medallion is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co 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 Western Union 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 Western Union Co 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 Western Union i.e., Western Union and Medallion Bank go up and down completely randomly.
Pair Corralation between Western Union and Medallion Bank
Allowing for the 90-day total investment horizon Western Union Co is expected to generate 1.02 times more return on investment than Medallion Bank. However, Western Union is 1.02 times more volatile than Medallion Bank PR. It trades about 0.14 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 1,061 in Western Union Co on September 13, 2024 and sell it today you would earn a total of 36.00 from holding Western Union Co or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Union Co vs. Medallion Bank PR
Performance |
| Timeline |
| Western Union |
| Medallion Bank PR |
Western Union and Medallion Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and Medallion Bank
The main advantage of trading using opposite Western Union and Medallion Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union 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.| Western Union vs. Navient Corp | Western Union vs. Green Dot | Western Union vs. Orix Corp Ads | Western Union vs. FirstCash |
| 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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