Correlation Between Miller Market and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Miller Market and Old Westbury 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 Market and Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miller Market Neutral and Old Westbury Large, you can compare the effects of market volatilities on Miller Market and Old Westbury 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 Market with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miller Market and Old Westbury.
Diversification Opportunities for Miller Market and Old Westbury
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Miller and Old is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Miller Market Neutral and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large and Miller Market 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 Market Neutral are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Large has no effect on the direction of Miller Market i.e., Miller Market and Old Westbury go up and down completely randomly.
Pair Corralation between Miller Market and Old Westbury
Assuming the 90 days horizon Miller Market Neutral is expected to under-perform the Old Westbury. In addition to that, Miller Market is 2.88 times more volatile than Old Westbury Large. It trades about -0.05 of its total potential returns per unit of risk. Old Westbury Large is currently generating about 0.1 per unit of volatility. If you would invest 1,500 in Old Westbury Large on September 4, 2024 and sell it today you would earn a total of 650.00 from holding Old Westbury Large or generate 43.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 47.37% |
| Values | Daily Returns |
Miller Market Neutral vs. Old Westbury Large
Performance |
| Timeline |
| Miller Market Neutral |
| Old Westbury Large |
Miller Market and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miller Market and Old Westbury
The main advantage of trading using opposite Miller Market and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Market position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Miller Market vs. Miller Vertible Bond | Miller Market vs. Miller Vertible Bond | Miller Market vs. Miller Vertible Bond | Miller Market vs. Miller Intermediate Bond |
| Old Westbury vs. Us Government Securities | Old Westbury vs. Short Term Government Fund | Old Westbury vs. Prudential Government Income | Old Westbury vs. Us Government Plus |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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