Correlation Between Mid-cap 15x and Miller Opportunity

Can any of the company-specific risk be diversified away by investing in both Mid-cap 15x 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 Mid-cap 15x and Miller Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mid Cap 15x Strategy and Miller Opportunity Trust, you can compare the effects of market volatilities on Mid-cap 15x 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 Mid-cap 15x with a short position of Miller Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-cap 15x and Miller Opportunity.

Diversification Opportunities for Mid-cap 15x and Miller Opportunity

0.9

Correlation Coefficient

Mid-cap 15x  Miller Opportunity

Almost no diversification

The 3 months correlation between Mid-cap and Miller is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy 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 Mid-cap 15x 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 Mid Cap 15x Strategy 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 Mid-cap 15x i.e., Mid-cap 15x and Miller Opportunity go up and down completely randomly.

Pair Corralation between Mid-cap 15x and Miller Opportunity

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to under-perform the Miller Opportunity. In addition to that, Mid-cap 15x is 1.06 times more volatile than Miller Opportunity Trust. It trades about -0.07 of its total potential returns per unit of risk. Miller Opportunity Trust is currently generating about -0.02 per unit of volatility. If you would invest  3,411  in Miller Opportunity Trust on December 25, 2024 and sell it today you would lose (90.00) from holding Miller Opportunity Trust or give up 2.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Mid Cap 15x Strategy  vs.  Miller Opportunity Trust

Mid Cap 15x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid Cap 15x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Miller Opportunity Trust

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Mid-cap 15x and Miller Opportunity

The main advantage of trading using opposite Mid-cap 15x and Miller Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-cap 15x 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.

The idea behind Mid Cap 15x Strategy and Miller Opportunity Trust 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..