Correlation Between NYSE Composite and Miller Opportunity
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Miller Opportunity 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 NYSE Composite and Miller Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Miller Opportunity Trust, you can compare the effects of market volatilities on NYSE Composite and Miller Opportunity 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 NYSE Composite with a short position of Miller Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Miller Opportunity.
Diversification Opportunities for NYSE Composite and Miller Opportunity
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Miller is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Miller Opportunity Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Opportunity Trust and NYSE Composite 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 NYSE Composite are associated (or correlated) with Miller Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Opportunity Trust has no effect on the direction of NYSE Composite i.e., NYSE Composite and Miller Opportunity go up and down completely randomly.
Pair Corralation between NYSE Composite and Miller Opportunity
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.68 times less return on investment than Miller Opportunity. But when comparing it to its historical volatility, NYSE Composite is 1.91 times less risky than Miller Opportunity. It trades about 0.14 of its potential returns per unit of risk. Miller Opportunity Trust is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,660 in Miller Opportunity Trust on August 25, 2024 and sell it today you would earn a total of 1,226 from holding Miller Opportunity Trust or generate 46.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Miller Opportunity Trust
Performance |
| Timeline |
NYSE Composite and Miller Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Miller Opportunity Trust
Pair trading matchups for Miller Opportunity
Pair Trading with NYSE Composite and Miller Opportunity
The main advantage of trading using opposite NYSE Composite and Miller Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Miller Opportunity 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 Opportunity will offset losses from the drop in Miller Opportunity's long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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