Correlation Between Miller Opportunity and 191216DE7

Can any of the company-specific risk be diversified away by investing in both Miller Opportunity and 191216DE7 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 191216DE7 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 COCA COLA CO, you can compare the effects of market volatilities on Miller Opportunity and 191216DE7 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 191216DE7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miller Opportunity and 191216DE7.

Diversification Opportunities for Miller Opportunity and 191216DE7

-0.55

Correlation Coefficient

Miller Opportunity  191216DE7

Excellent diversification

The 3 months correlation between Miller and 191216DE7 is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Miller Opportunity Trust and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO 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 191216DE7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of Miller Opportunity i.e., Miller Opportunity and 191216DE7 go up and down completely randomly.

Pair Corralation between Miller Opportunity and 191216DE7

Assuming the 90 days horizon Miller Opportunity Trust is expected to generate 2.5 times more return on investment than 191216DE7. However, Miller Opportunity is 2.5 times more volatile than COCA COLA CO. It trades about 0.1 of its potential returns per unit of risk. COCA COLA CO is currently generating about -0.15 per unit of risk. If you would invest  3,605  in Miller Opportunity Trust on September 24, 2024 and sell it today you would earn a total of  276.00  from holding Miller Opportunity Trust or generate 7.66% return on investment over 90 days.

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

Miller Opportunity Trust  vs.  COCA COLA CO

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.

COCA A CO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216DE7 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Miller Opportunity and 191216DE7

The main advantage of trading using opposite Miller Opportunity and 191216DE7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Opportunity position performs unexpectedly, 191216DE7 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 191216DE7 will offset losses from the drop in 191216DE7's long position.

The idea behind Miller Opportunity Trust and COCA COLA CO 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.