Correlation Between Mill City and Western Union
Can any of the company-specific risk be diversified away by investing in both Mill City and Western Union 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 Western Union 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 Western Union Co, you can compare the effects of market volatilities on Mill City and Western Union 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 Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mill City and Western Union.
Diversification Opportunities for Mill City and Western Union
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mill and Western is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and Western Union Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union 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 Western Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Union has no effect on the direction of Mill City i.e., Mill City and Western Union go up and down completely randomly.
Pair Corralation between Mill City and Western Union
Given the investment horizon of 90 days Mill City Ventures is expected to under-perform the Western Union. In addition to that, Mill City is 2.13 times more volatile than Western Union Co. It trades about -0.22 of its total potential returns per unit of risk. Western Union Co is currently generating about -0.13 per unit of volatility. If you would invest 1,155 in Western Union Co on August 24, 2024 and sell it today you would lose (51.00) from holding Western Union Co or give up 4.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mill City Ventures vs. Western Union Co
Performance |
| Timeline |
| Mill City Ventures |
| Western Union |
Mill City and Western Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mill City and Western Union
The main advantage of trading using opposite Mill City and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mill City position performs unexpectedly, Western Union 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 Western Union will offset losses from the drop in Western Union'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 |
| Western Union vs. American Express | Western Union vs. PayPal Holdings | Western Union vs. Capital One Financial | Western Union vs. Upstart Holdings |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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