Correlation Between Siit Emerging and Miller Opportunity

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

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

Diversification Opportunities for Siit Emerging and Miller Opportunity

0.22

Correlation Coefficient

Siit Emerging  Miller Opportunity

Modest diversification

The 3 months correlation between SIIT and Miller is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Siit Emerging Markets 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 Siit Emerging 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 Siit Emerging Markets 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 Siit Emerging i.e., Siit Emerging and Miller Opportunity go up and down completely randomly.

Pair Corralation between Siit Emerging and Miller Opportunity

Assuming the 90 days horizon Siit Emerging is expected to generate 2.42 times less return on investment than Miller Opportunity. But when comparing it to its historical volatility, Siit Emerging Markets is 1.73 times less risky than Miller Opportunity. It trades about 0.06 of its potential returns per unit of risk. Miller Opportunity Trust is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,000  in Miller Opportunity Trust on December 4, 2024 and sell it today you would earn a total of  1,276  from holding Miller Opportunity Trust or generate 63.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Siit Emerging Markets  vs.  Miller Opportunity Trust

Siit Emerging Markets

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siit Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Siit Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Siit Emerging and Miller Opportunity

The main advantage of trading using opposite Siit Emerging and Miller Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siit Emerging 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 Siit Emerging Markets 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.