Correlation Between Nelnet and Medallion Financial

Can any of the company-specific risk be diversified away by investing in both Nelnet 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 Nelnet and Medallion Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nelnet Inc and Medallion Financial Corp, you can compare the effects of market volatilities on Nelnet 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 Nelnet with a short position of Medallion Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nelnet and Medallion Financial.

Diversification Opportunities for Nelnet and Medallion Financial

0.74

Correlation Coefficient

Nelnet  Medallion Financial

Poor diversification

The 3 months correlation between Nelnet and Medallion is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nelnet Inc 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 Nelnet 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 Nelnet Inc 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 Nelnet i.e., Nelnet and Medallion Financial go up and down completely randomly.

Pair Corralation between Nelnet and Medallion Financial

Considering the 90-day investment horizon Nelnet Inc is expected to generate 0.74 times more return on investment than Medallion Financial. However, Nelnet Inc is 1.35 times less risky than Medallion Financial. It trades about 0.19 of its potential returns per unit of risk. Medallion Financial Corp is currently generating about 0.11 per unit of risk. If you would invest  10,531  in Nelnet Inc on May 6, 2025 and sell it today you would earn a total of  1,778  from holding Nelnet Inc or generate 16.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Nelnet Inc  vs.  Medallion Financial Corp

Nelnet Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nelnet Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Nelnet demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Medallion Financial Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medallion Financial Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent forward indicators, Medallion Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nelnet and Medallion Financial

The main advantage of trading using opposite Nelnet and Medallion Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nelnet 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 Nelnet Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.