Correlation Between Aggressive Investors and Meridian Contrarian
Can any of the company-specific risk be diversified away by investing in both Aggressive Investors and Meridian Contrarian 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 Aggressive Investors and Meridian Contrarian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aggressive Investors 1 and Meridian Trarian Fund, you can compare the effects of market volatilities on Aggressive Investors and Meridian Contrarian 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 Aggressive Investors with a short position of Meridian Contrarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Investors and Meridian Contrarian.
Diversification Opportunities for Aggressive Investors and Meridian Contrarian
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aggressive and MERIDIAN is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Investors 1 and Meridian Trarian Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Contrarian and Aggressive Investors 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 Aggressive Investors 1 are associated (or correlated) with Meridian Contrarian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Contrarian has no effect on the direction of Aggressive Investors i.e., Aggressive Investors and Meridian Contrarian go up and down completely randomly.
Pair Corralation between Aggressive Investors and Meridian Contrarian
Assuming the 90 days horizon Aggressive Investors 1 is expected to generate 0.88 times more return on investment than Meridian Contrarian. However, Aggressive Investors 1 is 1.14 times less risky than Meridian Contrarian. It trades about 0.12 of its potential returns per unit of risk. Meridian Trarian Fund is currently generating about 0.02 per unit of risk. If you would invest 6,143 in Aggressive Investors 1 on August 30, 2024 and sell it today you would earn a total of 4,272 from holding Aggressive Investors 1 or generate 69.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aggressive Investors 1 vs. Meridian Trarian Fund
Performance |
| Timeline |
| Aggressive Investors |
| Meridian Contrarian |
Aggressive Investors and Meridian Contrarian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aggressive Investors and Meridian Contrarian
The main advantage of trading using opposite Aggressive Investors and Meridian Contrarian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Investors position performs unexpectedly, Meridian Contrarian 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 Contrarian will offset losses from the drop in Meridian Contrarian's long position.| Aggressive Investors vs. First Trust Specialty | Aggressive Investors vs. Vanguard Financials Index | Aggressive Investors vs. Financials Ultrasector Profund | Aggressive Investors vs. Goldman Sachs Trust |
| Meridian Contrarian vs. Meridian Growth Fund | Meridian Contrarian vs. Clipper Fund Inc | Meridian Contrarian vs. Mairs Power Growth | Meridian Contrarian vs. Thompson Largecap 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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