Correlation Between Barings BDC and Mill City

Can any of the company-specific risk be diversified away by investing in both Barings BDC 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 Barings BDC and Mill City into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barings BDC and Mill City Ventures, you can compare the effects of market volatilities on Barings BDC 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 Barings BDC with a short position of Mill City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings BDC and Mill City.

Diversification Opportunities for Barings BDC and Mill City

-0.35

Correlation Coefficient

Barings BDC  Mill City

Very good diversification

The 3 months correlation between Barings and Mill is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Barings BDC 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 Barings BDC 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 Barings BDC 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 Barings BDC i.e., Barings BDC and Mill City go up and down completely randomly.

Pair Corralation between Barings BDC and Mill City

Given the investment horizon of 90 days Barings BDC is expected to under-perform the Mill City. But the stock apears to be less risky and, when comparing its historical volatility, Barings BDC is 2.36 times less risky than Mill City. The stock trades about -0.25 of its potential returns per unit of risk. The Mill City Ventures is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  201.00  in Mill City Ventures on September 28, 2024 and sell it today you would lose (4.00) from holding Mill City Ventures or give up 1.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Barings BDC  vs.  Mill City Ventures

Barings BDC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barings BDC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Barings BDC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Barings BDC and Mill City

The main advantage of trading using opposite Barings BDC and Mill City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings BDC 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.

The idea behind Barings BDC and Mill City Ventures 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.