Correlation Between World Acceptance and Mill City

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

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

Diversification Opportunities for World Acceptance and Mill City

-0.06

Correlation Coefficient

World Acceptance  Mill City

Good diversification

The 3 months correlation between World and Mill is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding World Acceptance 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 World Acceptance 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 World Acceptance 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 World Acceptance i.e., World Acceptance and Mill City go up and down completely randomly.

Pair Corralation between World Acceptance and Mill City

Given the investment horizon of 90 days World Acceptance is expected to generate 0.63 times more return on investment than Mill City. However, World Acceptance is 1.58 times less risky than Mill City. It trades about -0.01 of its potential returns per unit of risk. Mill City Ventures is currently generating about -0.05 per unit of risk. If you would invest  11,316  in World Acceptance on October 1, 2024 and sell it today you would lose (243.00) from holding World Acceptance or give up 2.15% of portfolio value over 90 days.

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

World Acceptance  vs.  Mill City Ventures

World Acceptance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days World Acceptance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, World Acceptance is not utilizing all of its potentials. The newest 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 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.

Pair Trading with World Acceptance and Mill City

The main advantage of trading using opposite World Acceptance and Mill City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Acceptance 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 World Acceptance 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.