Correlation Between Miller Intermediate and Western Asset
Can any of the company-specific risk be diversified away by investing in both Miller Intermediate and Western Asset 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 Intermediate and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miller Intermediate Bond and Western Asset Inflation, you can compare the effects of market volatilities on Miller Intermediate and Western Asset 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 Intermediate with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miller Intermediate and Western Asset.
Diversification Opportunities for Miller Intermediate and Western Asset
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Miller and Western is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Miller Intermediate Bond and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation and Miller Intermediate 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 Intermediate Bond are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Miller Intermediate i.e., Miller Intermediate and Western Asset go up and down completely randomly.
Pair Corralation between Miller Intermediate and Western Asset
Assuming the 90 days horizon Miller Intermediate Bond is expected to generate 1.16 times more return on investment than Western Asset. However, Miller Intermediate is 1.16 times more volatile than Western Asset Inflation. It trades about 0.32 of its potential returns per unit of risk. Western Asset Inflation is currently generating about 0.06 per unit of risk. If you would invest 2,676 in Miller Intermediate Bond on September 1, 2024 and sell it today you would earn a total of 73.00 from holding Miller Intermediate Bond or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Miller Intermediate Bond vs. Western Asset Inflation
Performance |
| Timeline |
| Miller Intermediate Bond |
| Western Asset Inflation |
Miller Intermediate and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miller Intermediate and Western Asset
The main advantage of trading using opposite Miller Intermediate and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Intermediate position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Miller Intermediate vs. Miller Market Neutral | Miller Intermediate vs. Miller Vertible Bond | Miller Intermediate vs. Miller Vertible Bond | Miller Intermediate vs. Miller Vertible Bond |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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