Correlation Between Mill City and Coca Cola

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

By analyzing existing cross correlation between Mill City Ventures and The Coca Cola, you can compare the effects of market volatilities on Mill City and Coca Cola 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 Mill City with a short position of Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mill City and Coca Cola.

Diversification Opportunities for Mill City and Coca Cola

0.63

Correlation Coefficient

Mill City  Coca Cola

Poor diversification

The 3 months correlation between Mill and Coca is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola and Mill City 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 Mill City Ventures are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of Mill City i.e., Mill City and Coca Cola go up and down completely randomly.

Pair Corralation between Mill City and Coca Cola

Given the investment horizon of 90 days Mill City Ventures is expected to generate 3.52 times more return on investment than Coca Cola. However, Mill City is 3.52 times more volatile than The Coca Cola. It trades about 0.01 of its potential returns per unit of risk. The Coca Cola is currently generating about -0.19 per unit of risk. If you would invest  196.00  in Mill City Ventures on October 5, 2024 and sell it today you would earn a total of  0.00  from holding Mill City Ventures or generate 0.0% return on investment over 90 days.

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

Mill City Ventures  vs.  The Coca Cola

Mill City Ventures

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mill City Ventures are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mill City is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Coca Cola

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Coca Cola has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Mill City and Coca Cola

The main advantage of trading using opposite Mill City and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mill City position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.

The idea behind Mill City Ventures and The Coca Cola 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.