Correlation Between Mill City and FirstCash

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

Diversification Opportunities for Mill City and FirstCash

0.38

Correlation Coefficient

Mill City  FirstCash

Weak diversification

The 3 months correlation between Mill and FirstCash is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and FirstCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstCash 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 FirstCash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstCash has no effect on the direction of Mill City i.e., Mill City and FirstCash go up and down completely randomly.

Pair Corralation between Mill City and FirstCash

Given the investment horizon of 90 days Mill City Ventures is expected to under-perform the FirstCash. In addition to that, Mill City is 1.96 times more volatile than FirstCash. It trades about -0.05 of its total potential returns per unit of risk. FirstCash is currently generating about -0.09 per unit of volatility. If you would invest  11,378  in FirstCash on October 1, 2024 and sell it today you would lose (1,068) from holding FirstCash or give up 9.39% of portfolio value over 90 days.

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

Mill City Ventures  vs.  FirstCash

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.

FirstCash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FirstCash has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental 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 Mill City and FirstCash

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

The idea behind Mill City Ventures and FirstCash 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.