Correlation Between Iaadx and Miller Income

Can any of the company-specific risk be diversified away by investing in both Iaadx and Miller Income 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 Iaadx and Miller Income into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iaadx and Miller Income Fund, you can compare the effects of market volatilities on Iaadx and Miller Income 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 Iaadx with a short position of Miller Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iaadx and Miller Income.

Diversification Opportunities for Iaadx and Miller Income

-0.49

Correlation Coefficient

Iaadx  Miller Income

Very good diversification

The 3 months correlation between Iaadx and Miller is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Iaadx and Miller Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Income and Iaadx 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 Iaadx are associated (or correlated) with Miller Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Income has no effect on the direction of Iaadx i.e., Iaadx and Miller Income go up and down completely randomly.

Pair Corralation between Iaadx and Miller Income

Assuming the 90 days horizon Iaadx is expected to generate 0.21 times more return on investment than Miller Income. However, Iaadx is 4.66 times less risky than Miller Income. It trades about 0.18 of its potential returns per unit of risk. Miller Income Fund is currently generating about -0.06 per unit of risk. If you would invest  884.00  in Iaadx on December 28, 2024 and sell it today you would earn a total of  22.00  from holding Iaadx or generate 2.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Iaadx  vs.  Miller Income Fund

Iaadx

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iaadx are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Iaadx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Miller Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Miller Income Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Miller Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Iaadx and Miller Income

The main advantage of trading using opposite Iaadx and Miller Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iaadx position performs unexpectedly, Miller Income 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 Income will offset losses from the drop in Miller Income's long position.

The idea behind Iaadx and Miller Income Fund 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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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.