Correlation Between Mill City and SLM Corp

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

Diversification Opportunities for Mill City and SLM Corp

0.14

Correlation Coefficient

Mill City  SLM Corp

Average diversification

The 3 months correlation between Mill and SLM is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and SLM Corp Pb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM Corp Pb 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 SLM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLM Corp Pb has no effect on the direction of Mill City i.e., Mill City and SLM Corp go up and down completely randomly.

Pair Corralation between Mill City and SLM Corp

Given the investment horizon of 90 days Mill City Ventures is expected to generate 23.98 times more return on investment than SLM Corp. However, Mill City is 23.98 times more volatile than SLM Corp Pb. It trades about 0.21 of its potential returns per unit of risk. SLM Corp Pb is currently generating about 0.17 per unit of risk. If you would invest  197.00  in Mill City Ventures on October 26, 2024 and sell it today you would earn a total of  81.00  from holding Mill City Ventures or generate 41.12% return on investment over 90 days.

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

Mill City Ventures  vs.  SLM Corp Pb

Mill City Ventures

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mill City Ventures are ranked lower than 6 (%) 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.

SLM Corp Pb

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SLM Corp Pb are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, SLM Corp is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Mill City and SLM Corp

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

The idea behind Mill City Ventures and SLM Corp Pb 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.