Correlation Between Medallion Financial and Runway Growth

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Can any of the company-specific risk be diversified away by investing in both Medallion Financial and Runway Growth 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 Medallion Financial and Runway Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medallion Financial Corp and Runway Growth Finance, you can compare the effects of market volatilities on Medallion Financial and Runway Growth 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 Medallion Financial with a short position of Runway Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medallion Financial and Runway Growth.

Diversification Opportunities for Medallion Financial and Runway Growth

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Medallion and Runway is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Medallion Financial Corp and Runway Growth Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Runway Growth Finance and Medallion Financial 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 Medallion Financial Corp are associated (or correlated) with Runway Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Runway Growth Finance has no effect on the direction of Medallion Financial i.e., Medallion Financial and Runway Growth go up and down completely randomly.

Pair Corralation between Medallion Financial and Runway Growth

Given the investment horizon of 90 days Medallion Financial is expected to generate 1.32 times less return on investment than Runway Growth. In addition to that, Medallion Financial is 1.61 times more volatile than Runway Growth Finance. It trades about 0.17 of its total potential returns per unit of risk. Runway Growth Finance is currently generating about 0.35 per unit of volatility. If you would invest  1,001  in Runway Growth Finance on September 16, 2024 and sell it today you would earn a total of  90.00  from holding Runway Growth Finance or generate 8.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Medallion Financial Corp  vs.  Runway Growth Finance

 Performance 
       Timeline  
Medallion Financial Corp 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
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.
Runway Growth Finance 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Runway Growth Finance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Runway Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Medallion Financial and Runway Growth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Medallion Financial and Runway Growth

The main advantage of trading using opposite Medallion Financial and Runway Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medallion Financial position performs unexpectedly, Runway Growth 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 Runway Growth will offset losses from the drop in Runway Growth's long position.
The idea behind Medallion Financial Corp and Runway Growth Finance 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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