Correlation Between Mill City and Saratoga Investment

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

Diversification Opportunities for Mill City and Saratoga Investment

-0.02

Correlation Coefficient

Mill City  Saratoga Investment

Good diversification

The 3 months correlation between Mill and Saratoga is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and Saratoga Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saratoga Investment Corp 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 Saratoga Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saratoga Investment Corp has no effect on the direction of Mill City i.e., Mill City and Saratoga Investment go up and down completely randomly.

Pair Corralation between Mill City and Saratoga Investment

Given the investment horizon of 90 days Mill City is expected to generate 1.13 times less return on investment than Saratoga Investment. In addition to that, Mill City is 7.57 times more volatile than Saratoga Investment Corp. It trades about 0.02 of its total potential returns per unit of risk. Saratoga Investment Corp is currently generating about 0.14 per unit of volatility. If you would invest  2,307  in Saratoga Investment Corp on December 27, 2024 and sell it today you would earn a total of  205.00  from holding Saratoga Investment Corp or generate 8.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Mill City Ventures  vs.  Saratoga Investment Corp

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 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mill City may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Saratoga Investment Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Saratoga Investment Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Saratoga Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Mill City and Saratoga Investment

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

The idea behind Mill City Ventures and Saratoga Investment 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.