Correlation Between Miller Opportunity and Cajxx

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

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

Diversification Opportunities for Miller Opportunity and Cajxx

-0.75

Correlation Coefficient

Miller Opportunity  Cajxx

Pay attention - limited upside

The 3 months correlation between Miller and Cajxx is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Miller Opportunity Trust and Cajxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cajxx and Miller Opportunity 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 Opportunity Trust are associated (or correlated) with Cajxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cajxx has no effect on the direction of Miller Opportunity i.e., Miller Opportunity and Cajxx go up and down completely randomly.

Pair Corralation between Miller Opportunity and Cajxx

Assuming the 90 days horizon Miller Opportunity is expected to generate 55.13 times less return on investment than Cajxx. But when comparing it to its historical volatility, Miller Opportunity Trust is 55.16 times less risky than Cajxx. It trades about 0.11 of its potential returns per unit of risk. Cajxx is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  492.00  in Cajxx on September 29, 2024 and sell it today you would lose (392.00) from holding Cajxx or give up 79.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

Miller Opportunity Trust  vs.  Cajxx

Miller Opportunity Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Miller Opportunity Trust are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Miller Opportunity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cajxx

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cajxx are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Cajxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Miller Opportunity and Cajxx

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

The idea behind Miller Opportunity Trust and Cajxx 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.