Correlation Between Mill City and New Horizon

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

Diversification Opportunities for Mill City and New Horizon

0.68

Correlation Coefficient

Mill City  New Horizon

Poor diversification

The 3 months correlation between Mill and New is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and New Horizon Aircraft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Horizon Aircraft 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 New Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Horizon Aircraft has no effect on the direction of Mill City i.e., Mill City and New Horizon go up and down completely randomly.

Pair Corralation between Mill City and New Horizon

Given the investment horizon of 90 days Mill City Ventures is expected to under-perform the New Horizon. But the stock apears to be less risky and, when comparing its historical volatility, Mill City Ventures is 2.58 times less risky than New Horizon. The stock trades about -0.07 of its potential returns per unit of risk. The New Horizon Aircraft is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  90.00  in New Horizon Aircraft on September 4, 2024 and sell it today you would lose (9.00) from holding New Horizon Aircraft or give up 10.0% of portfolio value over 90 days.

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

Mill City Ventures  vs.  New Horizon Aircraft

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

New Horizon Aircraft

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Horizon Aircraft are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, New Horizon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mill City and New Horizon

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

The idea behind Mill City Ventures and New Horizon Aircraft 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.