Correlation Between Mill City and BCB Bancorp
Can any of the company-specific risk be diversified away by investing in both Mill City and BCB Bancorp 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 BCB Bancorp 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 BCB Bancorp, you can compare the effects of market volatilities on Mill City and BCB Bancorp 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 BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mill City and BCB Bancorp.
Diversification Opportunities for Mill City and BCB Bancorp
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mill and BCB is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Mill City i.e., Mill City and BCB Bancorp go up and down completely randomly.
Pair Corralation between Mill City and BCB Bancorp
Given the investment horizon of 90 days Mill City Ventures is expected to under-perform the BCB Bancorp. In addition to that, Mill City is 1.85 times more volatile than BCB Bancorp. It trades about -0.02 of its total potential returns per unit of risk. BCB Bancorp is currently generating about 0.24 per unit of volatility. If you would invest 1,204 in BCB Bancorp on August 30, 2024 and sell it today you would earn a total of 137.00 from holding BCB Bancorp or generate 11.38% 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. BCB Bancorp
Performance |
| Timeline |
| Mill City Ventures |
| BCB Bancorp |
Mill City and BCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mill City and BCB Bancorp
The main advantage of trading using opposite Mill City and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mill City position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.| Mill City vs. Consumer Portfolio Services | Mill City vs. Atlanticus Holdings Corp | Mill City vs. Nelnet Inc | Mill City vs. Senmiao Technology |
| BCB Bancorp vs. SVB T Corp | BCB Bancorp vs. First Capital | BCB Bancorp vs. Pioneer Bankcorp | BCB Bancorp vs. Liberty Northwest Bancorp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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