Correlation Between Miller Opportunity and Best Buy
Can any of the company-specific risk be diversified away by investing in both Miller Opportunity and Best Buy 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 Best Buy 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 Best Buy Co, you can compare the effects of market volatilities on Miller Opportunity and Best Buy 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 Best Buy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miller Opportunity and Best Buy.
Diversification Opportunities for Miller Opportunity and Best Buy
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Miller and Best is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Miller Opportunity Trust and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy 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 Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of Miller Opportunity i.e., Miller Opportunity and Best Buy go up and down completely randomly.
Pair Corralation between Miller Opportunity and Best Buy
Assuming the 90 days horizon Miller Opportunity Trust is expected to generate 0.8 times more return on investment than Best Buy. However, Miller Opportunity Trust is 1.26 times less risky than Best Buy. It trades about -0.07 of its potential returns per unit of risk. Best Buy Co is currently generating about -0.22 per unit of risk. If you would invest 3,307 in Miller Opportunity Trust on January 26, 2024 and sell it today you would lose (64.00) from holding Miller Opportunity Trust or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Miller Opportunity Trust vs. Best Buy Co
Performance |
| Timeline |
| Miller Opportunity Trust |
| Best Buy |
Miller Opportunity and Best Buy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miller Opportunity and Best Buy
The main advantage of trading using opposite Miller Opportunity and Best Buy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Opportunity position performs unexpectedly, Best Buy 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 Best Buy will offset losses from the drop in Best Buy's long position.| Miller Opportunity vs. Government Street Equity | Miller Opportunity vs. Federated Mdt Mid Cap | Miller Opportunity vs. Janus Enterprise Fund | Miller Opportunity vs. Victory Integrity Mid Cap |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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