Correlation Between Fidelity Convertible and Miller Convertible
Can any of the company-specific risk be diversified away by investing in both Fidelity Convertible and Miller Convertible 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 Fidelity Convertible and Miller Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Vertible Securities and Miller Vertible Bond, you can compare the effects of market volatilities on Fidelity Convertible and Miller Convertible 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 Fidelity Convertible with a short position of Miller Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Convertible and Miller Convertible.
Diversification Opportunities for Fidelity Convertible and Miller Convertible
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Miller is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Vertible Securities and Miller Vertible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Vertible Bond and Fidelity Convertible 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 Fidelity Vertible Securities are associated (or correlated) with Miller Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Vertible Bond has no effect on the direction of Fidelity Convertible i.e., Fidelity Convertible and Miller Convertible go up and down completely randomly.
Pair Corralation between Fidelity Convertible and Miller Convertible
Assuming the 90 days horizon Fidelity Vertible Securities is expected to generate 1.7 times more return on investment than Miller Convertible. However, Fidelity Convertible is 1.7 times more volatile than Miller Vertible Bond. It trades about 0.45 of its potential returns per unit of risk. Miller Vertible Bond is currently generating about 0.15 per unit of risk. If you would invest 3,529 in Fidelity Vertible Securities on August 29, 2024 and sell it today you would earn a total of 236.00 from holding Fidelity Vertible Securities or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Vertible Securities vs. Miller Vertible Bond
Performance |
| Timeline |
| Fidelity Convertible |
| Miller Vertible Bond |
Fidelity Convertible and Miller Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Convertible and Miller Convertible
The main advantage of trading using opposite Fidelity Convertible and Miller Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Convertible position performs unexpectedly, Miller Convertible 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 Convertible will offset losses from the drop in Miller Convertible's long position.The idea behind Fidelity Vertible Securities and Miller Vertible Bond 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.
| Miller Convertible vs. Miller Opportunity Trust | Miller Convertible vs. Miller Vertible Bond | Miller Convertible vs. Miller Vertible Bond | Miller Convertible 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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