Correlation Between Regional Management and Mill City
Can any of the company-specific risk be diversified away by investing in both Regional Management and Mill City 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 Regional Management and Mill City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and Mill City Ventures, you can compare the effects of market volatilities on Regional Management and Mill City 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 Regional Management with a short position of Mill City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and Mill City.
Diversification Opportunities for Regional Management and Mill City
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regional and Mill is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and Mill City Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mill City Ventures and Regional Management 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 Regional Management Corp are associated (or correlated) with Mill City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mill City Ventures has no effect on the direction of Regional Management i.e., Regional Management and Mill City go up and down completely randomly.
Pair Corralation between Regional Management and Mill City
Allowing for the 90-day total investment horizon Regional Management is expected to generate 100.88 times less return on investment than Mill City. But when comparing it to its historical volatility, Regional Management Corp is 44.88 times less risky than Mill City. It trades about 0.05 of its potential returns per unit of risk. Mill City Ventures is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 254.00 in Mill City Ventures on August 29, 2024 and sell it today you would lose (53.50) from holding Mill City Ventures or give up 21.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Regional Management Corp vs. Mill City Ventures
Performance |
| Timeline |
| Regional Management Corp |
| Mill City Ventures |
Regional Management and Mill City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and Mill City
The main advantage of trading using opposite Regional Management and Mill City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management position performs unexpectedly, Mill City 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 Mill City will offset losses from the drop in Mill City's long position.| Regional Management vs. Visa Class A | Regional Management vs. Mastercard | Regional Management vs. Discover Financial Services |
| Mill City vs. Consumer Portfolio Services | Mill City vs. Atlanticus Holdings Corp | Mill City vs. Nelnet Inc | Mill City vs. Senmiao Technology |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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