Correlation Between Ab Impact and Meridian Equity
Can any of the company-specific risk be diversified away by investing in both Ab Impact and Meridian Equity 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 Ab Impact and Meridian Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Impact Municipal and Meridian Equity Income, you can compare the effects of market volatilities on Ab Impact and Meridian Equity 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 Ab Impact with a short position of Meridian Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Impact and Meridian Equity.
Diversification Opportunities for Ab Impact and Meridian Equity
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between ABIMX and Meridian is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ab Impact Municipal and Meridian Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Equity Income and Ab Impact 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 Ab Impact Municipal are associated (or correlated) with Meridian Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Equity Income has no effect on the direction of Ab Impact i.e., Ab Impact and Meridian Equity go up and down completely randomly.
Pair Corralation between Ab Impact and Meridian Equity
Assuming the 90 days horizon Ab Impact is expected to generate 1.5 times less return on investment than Meridian Equity. But when comparing it to its historical volatility, Ab Impact Municipal is 1.25 times less risky than Meridian Equity. It trades about 0.21 of its potential returns per unit of risk. Meridian Equity Income is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,503 in Meridian Equity Income on September 1, 2024 and sell it today you would earn a total of 41.00 from holding Meridian Equity Income or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ab Impact Municipal vs. Meridian Equity Income
Performance |
| Timeline |
| Ab Impact Municipal |
| Meridian Equity Income |
Ab Impact and Meridian Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Impact and Meridian Equity
The main advantage of trading using opposite Ab Impact and Meridian Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Impact position performs unexpectedly, Meridian Equity 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 Meridian Equity will offset losses from the drop in Meridian Equity's long position.| Ab Impact vs. Barings Emerging Markets | Ab Impact vs. Artisan Emerging Markets | Ab Impact vs. Black Oak Emerging | Ab Impact vs. Ashmore Emerging Markets |
| Meridian Equity vs. Fidelity Advisor Energy | Meridian Equity vs. Short Oil Gas | Meridian Equity vs. Alpsalerian Energy Infrastructure | Meridian Equity vs. World Energy Fund |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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