Correlation Between Western Union and Medallion Financial
Can any of the company-specific risk be diversified away by investing in both Western Union 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 Western Union and Medallion Financial 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 Financial Corp, you can compare the effects of market volatilities on Western Union 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 Western Union with a short position of Medallion Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Medallion Financial.
Diversification Opportunities for Western Union and Medallion Financial
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Medallion is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Western Union Co 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 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 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 Western Union i.e., Western Union and Medallion Financial go up and down completely randomly.
Pair Corralation between Western Union and Medallion Financial
Allowing for the 90-day total investment horizon Western Union Co is expected to under-perform the Medallion Financial. But the stock apears to be less risky and, when comparing its historical volatility, Western Union Co is 1.17 times less risky than Medallion Financial. The stock trades about -0.13 of its potential returns per unit of risk. The Medallion Financial Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 890.00 in Medallion Financial Corp on August 24, 2024 and sell it today you would earn a total of 67.00 from holding Medallion Financial Corp or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Western Union Co vs. Medallion Financial Corp
Performance |
| Timeline |
| Western Union |
| Medallion Financial Corp |
Western Union and Medallion Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Union and Medallion Financial
The main advantage of trading using opposite Western Union and Medallion Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union 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.| Western Union vs. American Express | Western Union vs. PayPal Holdings | Western Union vs. Capital One Financial | Western Union vs. Upstart Holdings |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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