Correlation Between Mill City and United Guardian

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

Diversification Opportunities for Mill City and United Guardian

0.52

Correlation Coefficient

Mill City  United Guardian

Very weak diversification

The 3 months correlation between Mill and United is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and United Guardian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Guardian 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 United Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Guardian has no effect on the direction of Mill City i.e., Mill City and United Guardian go up and down completely randomly.

Pair Corralation between Mill City and United Guardian

Given the investment horizon of 90 days Mill City Ventures is expected to generate 20.85 times more return on investment than United Guardian. However, Mill City is 20.85 times more volatile than United Guardian. It trades about 0.06 of its potential returns per unit of risk. United Guardian is currently generating about 0.01 per unit of risk. If you would invest  254.00  in Mill City Ventures on October 4, 2024 and sell it today you would lose (58.00) from holding Mill City Ventures or give up 22.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.34%
Values	Daily Returns

Mill City Ventures  vs.  United Guardian

Mill City Ventures

Risk-Adjusted Performance

0 of 100

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.

United Guardian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Guardian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Mill City and United Guardian

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

The idea behind Mill City Ventures and United Guardian 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.