Correlation Between Dow Jones and Miller Income
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Miller Income 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 Dow Jones and Miller Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Miller Income Fund, you can compare the effects of market volatilities on Dow Jones and Miller Income 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 Dow Jones with a short position of Miller Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Miller Income.
Diversification Opportunities for Dow Jones and Miller Income
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Miller is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Miller Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Income and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Miller Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Income has no effect on the direction of Dow Jones i.e., Dow Jones and Miller Income go up and down completely randomly.
Pair Corralation between Dow Jones and Miller Income
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.19 times less return on investment than Miller Income. But when comparing it to its historical volatility, Dow Jones Industrial is 1.59 times less risky than Miller Income. It trades about 0.37 of its potential returns per unit of risk. Miller Income Fund is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 847.00 in Miller Income Fund on September 1, 2024 and sell it today you would earn a total of 79.00 from holding Miller Income Fund or generate 9.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Miller Income Fund
Performance |
| Timeline |
Dow Jones and Miller Income Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Miller Income Fund
Pair trading matchups for Miller Income
Pair Trading with Dow Jones and Miller Income
The main advantage of trading using opposite Dow Jones and Miller Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Miller Income 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 Miller Income will offset losses from the drop in Miller Income's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Miller Income vs. Miller Opportunity Trust | Miller Income vs. Miller Income Fund | Miller Income vs. Miller Income Fund | Miller Income vs. Miller Opportunity Trust |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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