Correlation Between Miller Opportunity and Multi Strategy
Can any of the company-specific risk be diversified away by investing in both Miller Opportunity and Multi Strategy 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 Multi Strategy 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 The Multi Strategy Growth, you can compare the effects of market volatilities on Miller Opportunity and Multi Strategy 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 Multi Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miller Opportunity and Multi Strategy.
Diversification Opportunities for Miller Opportunity and Multi Strategy
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Miller and Multi is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Miller Opportunity Trust and The Multi Strategy Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Strategy 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 Multi Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Strategy has no effect on the direction of Miller Opportunity i.e., Miller Opportunity and Multi Strategy go up and down completely randomly.
Pair Corralation between Miller Opportunity and Multi Strategy
Assuming the 90 days horizon Miller Opportunity Trust is expected to generate 2.14 times more return on investment than Multi Strategy. However, Miller Opportunity is 2.14 times more volatile than The Multi Strategy Growth. It trades about -0.13 of its potential returns per unit of risk. The Multi Strategy Growth is currently generating about -0.42 per unit of risk. If you would invest 4,108 in Miller Opportunity Trust on September 26, 2024 and sell it today you would lose (139.00) from holding Miller Opportunity Trust or give up 3.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.45% |
Values | Daily Returns |
Miller Opportunity Trust vs. The Multi Strategy Growth
Performance |
Timeline |
Miller Opportunity Trust |
Multi Strategy |
Miller Opportunity and Multi Strategy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Miller Opportunity and Multi Strategy
The main advantage of trading using opposite Miller Opportunity and Multi Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Opportunity position performs unexpectedly, Multi Strategy 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 Multi Strategy will offset losses from the drop in Multi Strategy's long position.Miller Opportunity vs. Miller Opportunity Trust | Miller Opportunity vs. Miller Income Fund | Miller Opportunity vs. Miller Income Fund | Miller Opportunity vs. Miller Income Fund |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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