Correlation Between Mill City and PROCTER

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

Diversification Opportunities for Mill City and PROCTER

0.05

Correlation Coefficient

Mill City  PROCTER

Significant diversification

The 3 months correlation between Mill and PROCTER is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and PROCTER GAMBLE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROCTER GAMBLE CO 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 PROCTER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROCTER GAMBLE CO has no effect on the direction of Mill City i.e., Mill City and PROCTER go up and down completely randomly.

Pair Corralation between Mill City and PROCTER

Given the investment horizon of 90 days Mill City Ventures is expected to generate 14.67 times more return on investment than PROCTER. However, Mill City is 14.67 times more volatile than PROCTER GAMBLE CO. It trades about 0.0 of its potential returns per unit of risk. PROCTER GAMBLE CO is currently generating about -0.09 per unit of risk. If you would invest  195.00  in Mill City Ventures on December 30, 2024 and sell it today you would lose (29.00) from holding Mill City Ventures or give up 14.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Mill City Ventures  vs.  PROCTER GAMBLE CO

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.

PROCTER GAMBLE CO

Risk-Adjusted Performance

Very Weak

Over the last 90 days PROCTER GAMBLE CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PROCTER is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mill City and PROCTER

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

The idea behind Mill City Ventures and PROCTER GAMBLE CO 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.