Correlation Between Miller Opportunity and Saat Moderate
Can any of the company-specific risk be diversified away by investing in both Miller Opportunity and Saat Moderate 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 Miller Opportunity and Saat Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miller Opportunity Trust and Saat Moderate Strategy, you can compare the effects of market volatilities on Miller Opportunity and Saat Moderate 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 Miller Opportunity with a short position of Saat Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miller Opportunity and Saat Moderate.
Diversification Opportunities for Miller Opportunity and Saat Moderate
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Miller and Saat is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Miller Opportunity Trust and Saat Moderate Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saat Moderate Strategy and Miller Opportunity 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 Miller Opportunity Trust are associated (or correlated) with Saat Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saat Moderate Strategy has no effect on the direction of Miller Opportunity i.e., Miller Opportunity and Saat Moderate go up and down completely randomly.
Pair Corralation between Miller Opportunity and Saat Moderate
Assuming the 90 days horizon Miller Opportunity Trust is expected to generate 4.47 times more return on investment than Saat Moderate. However, Miller Opportunity is 4.47 times more volatile than Saat Moderate Strategy. It trades about 0.09 of its potential returns per unit of risk. Saat Moderate Strategy is currently generating about 0.12 per unit of risk. If you would invest 3,018 in Miller Opportunity Trust on August 25, 2024 and sell it today you would earn a total of 868.00 from holding Miller Opportunity Trust or generate 28.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miller Opportunity Trust vs. Saat Moderate Strategy
Performance |
| Timeline |
| Miller Opportunity Trust |
| Saat Moderate Strategy |
Miller Opportunity and Saat Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miller Opportunity and Saat Moderate
The main advantage of trading using opposite Miller Opportunity and Saat Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Opportunity position performs unexpectedly, Saat Moderate 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 Saat Moderate will offset losses from the drop in Saat Moderate's long position.The idea behind Miller Opportunity Trust and Saat Moderate Strategy 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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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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