Correlation Between Mill City and PennantPark Floating

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

Diversification Opportunities for Mill City and PennantPark Floating

-0.22

Correlation Coefficient

Mill City  PennantPark Floating

Very good diversification

The 3 months correlation between Mill and PennantPark is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate 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 PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of Mill City i.e., Mill City and PennantPark Floating go up and down completely randomly.

Pair Corralation between Mill City and PennantPark Floating

Given the investment horizon of 90 days Mill City is expected to generate 4.04 times less return on investment than PennantPark Floating. In addition to that, Mill City is 8.76 times more volatile than PennantPark Floating Rate. It trades about 0.0 of its total potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.12 per unit of volatility. If you would invest  1,056  in PennantPark Floating Rate on December 29, 2024 and sell it today you would earn a total of  72.00  from holding PennantPark Floating Rate or generate 6.82% return on investment over 90 days.

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

Mill City Ventures  vs.  PennantPark Floating Rate

Mill City Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mill City Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

PennantPark Floating Rate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Floating Rate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, PennantPark Floating may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Mill City and PennantPark Floating

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

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