Correlation Between Mill City and Enova International

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

Diversification Opportunities for Mill City and Enova International

-0.65

Correlation Coefficient

Mill City  Enova International

Excellent diversification

The 3 months correlation between Mill and Enova is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and Enova International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enova International 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 Enova International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enova International has no effect on the direction of Mill City i.e., Mill City and Enova International go up and down completely randomly.

Pair Corralation between Mill City and Enova International

Given the investment horizon of 90 days Mill City Ventures is expected to under-perform the Enova International. In addition to that, Mill City is 1.49 times more volatile than Enova International. It trades about -0.05 of its total potential returns per unit of risk. Enova International is currently generating about 0.14 per unit of volatility. If you would invest  8,184  in Enova International on October 1, 2024 and sell it today you would earn a total of  1,604  from holding Enova International or generate 19.6% return on investment over 90 days.

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

Mill City Ventures  vs.  Enova International

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 weak 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.

Enova International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enova International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Enova International sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mill City and Enova International

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

The idea behind Mill City Ventures and Enova International 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.