Correlation Between Mill City and Medallion Bank

Can any of the company-specific risk be diversified away by investing in both Mill City and Medallion Bank 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 Medallion Bank 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 Medallion Bank PR, you can compare the effects of market volatilities on Mill City and Medallion Bank 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 Medallion Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mill City and Medallion Bank.

Diversification Opportunities for Mill City and Medallion Bank

0.36

Correlation Coefficient

Mill City  Medallion Bank

Weak diversification

The 3 months correlation between Mill and Medallion is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and Medallion Bank PR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medallion Bank PR 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 Medallion Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medallion Bank PR has no effect on the direction of Mill City i.e., Mill City and Medallion Bank go up and down completely randomly.

Pair Corralation between Mill City and Medallion Bank

Given the investment horizon of 90 days Mill City Ventures is expected to generate 10.79 times more return on investment than Medallion Bank. However, Mill City is 10.79 times more volatile than Medallion Bank PR. It trades about 0.03 of its potential returns per unit of risk. Medallion Bank PR is currently generating about 0.03 per unit of risk. If you would invest  200.00  in Mill City Ventures on December 3, 2024 and sell it today you would lose (3.00) from holding Mill City Ventures or give up 1.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Mill City Ventures  vs.  Medallion Bank PR

Mill City Ventures

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mill City Ventures are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mill City unveiled solid returns over the last few months and may actually be approaching a breakup point.

Medallion Bank PR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Medallion Bank PR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking signals, Medallion Bank is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Mill City and Medallion Bank

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

The idea behind Mill City Ventures and Medallion Bank PR 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.