Correlation Between Dow Jones and Meridian Contrarian
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Meridian Contrarian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Meridian Trarian Fund, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Meridian Contrarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Meridian Contrarian.
Diversification Opportunities for Dow Jones and Meridian Contrarian
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Meridian is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Meridian Trarian Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Contrarian and Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Meridian Contrarian go up and down completely randomly.
Pair Corralation between Dow Jones and Meridian Contrarian
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.38 times less return on investment than Meridian Contrarian. But when comparing it to its historical volatility, Dow Jones Industrial is 1.15 times less risky than Meridian Contrarian. It trades about 0.27 of its potential returns per unit of risk. Meridian Trarian Fund is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,514 in Meridian Trarian Fund on August 30, 2024 and sell it today you would earn a total of 289.00 from holding Meridian Trarian Fund or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Meridian Trarian Fund
Performance |
| Timeline |
Dow Jones and Meridian Contrarian Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Meridian Trarian Fund
Pair trading matchups for Meridian Contrarian
Pair Trading with Dow Jones and Meridian Contrarian
The main advantage of trading using opposite Dow Jones and Meridian Contrarian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Meridian Contrarian vs. Meridian Trarian Fund | Meridian Contrarian vs. Meridian Trarian Fund | Meridian Contrarian vs. Mfs Value Fund | Meridian Contrarian vs. Fidelity Advisor Mid |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |