Correlation Between Miller Convertible and Fidelity Convertible
Can any of the company-specific risk be diversified away by investing in both Miller Convertible and Fidelity 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 Miller Convertible and Fidelity Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miller Vertible Bond and Fidelity Vertible Securities, you can compare the effects of market volatilities on Miller Convertible and Fidelity 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 Miller Convertible with a short position of Fidelity Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miller Convertible and Fidelity Convertible.
Diversification Opportunities for Miller Convertible and Fidelity Convertible
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Miller and Fidelity is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Miller Vertible Bond and Fidelity Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Convertible and Miller 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 Miller Vertible Bond are associated (or correlated) with Fidelity Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Convertible has no effect on the direction of Miller Convertible i.e., Miller Convertible and Fidelity Convertible go up and down completely randomly.
Pair Corralation between Miller Convertible and Fidelity Convertible
Assuming the 90 days horizon Miller Convertible is expected to generate 5.24 times less return on investment than Fidelity Convertible. But when comparing it to its historical volatility, Miller Vertible Bond is 1.7 times less risky than Fidelity Convertible. It trades about 0.15 of its potential returns per unit of risk. Fidelity Vertible Securities is currently generating about 0.45 of returns per unit of risk over similar time horizon. 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 |
Miller Vertible Bond vs. Fidelity Vertible Securities
Performance |
| Timeline |
| Miller Vertible Bond |
| Fidelity Convertible |
Miller Convertible and Fidelity Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miller Convertible and Fidelity Convertible
The main advantage of trading using opposite Miller Convertible and Fidelity Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Convertible position performs unexpectedly, Fidelity 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 Fidelity Convertible will offset losses from the drop in Fidelity Convertible's long position.| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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