Correlation Between Atlanticus Holdings and Medallion Financial

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

Diversification Opportunities for Atlanticus Holdings and Medallion Financial

0.7

Correlation Coefficient

Atlanticus Holdings  Medallion Financial

Poor diversification

The 3 months correlation between Atlanticus and Medallion is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Atlanticus Holdings Corp 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 Atlanticus 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 Atlanticus Holdings Corp 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 Atlanticus Holdings i.e., Atlanticus Holdings and Medallion Financial go up and down completely randomly.

Pair Corralation between Atlanticus Holdings and Medallion Financial

Assuming the 90 days horizon Atlanticus Holdings is expected to generate 5.34 times less return on investment than Medallion Financial. But when comparing it to its historical volatility, Atlanticus Holdings Corp is 2.28 times less risky than Medallion Financial. It trades about 0.12 of its potential returns per unit of risk. Medallion Financial Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  764.00  in Medallion Financial Corp on September 17, 2024 and sell it today you would earn a total of  251.00  from holding Medallion Financial Corp or generate 32.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Atlanticus Holdings Corp  vs.  Medallion Financial Corp

Atlanticus Holdings Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atlanticus Holdings Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Atlanticus Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Medallion Financial Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Medallion Financial Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward indicators, Medallion Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlanticus Holdings and Medallion Financial

The main advantage of trading using opposite Atlanticus Holdings and Medallion Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlanticus 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 Atlanticus Holdings Corp 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.