Correlation Between Gateway Fund and Meridian Equity
Can any of the company-specific risk be diversified away by investing in both Gateway Fund 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 Gateway Fund and Meridian Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gateway Fund Class and Meridian Equity Income, you can compare the effects of market volatilities on Gateway Fund 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 Gateway Fund with a short position of Meridian Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gateway Fund and Meridian Equity.
Diversification Opportunities for Gateway Fund and Meridian Equity
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gateway and Meridian is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Gateway Fund Class 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 Gateway Fund 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 Gateway Fund Class 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 Gateway Fund i.e., Gateway Fund and Meridian Equity go up and down completely randomly.
Pair Corralation between Gateway Fund and Meridian Equity
Assuming the 90 days horizon Gateway Fund Class is expected to generate 1.12 times more return on investment than Meridian Equity. However, Gateway Fund is 1.12 times more volatile than Meridian Equity Income. It trades about 0.2 of its potential returns per unit of risk. Meridian Equity Income is currently generating about 0.12 per unit of risk. If you would invest 4,586 in Gateway Fund Class on August 29, 2024 and sell it today you would earn a total of 110.00 from holding Gateway Fund Class or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gateway Fund Class vs. Meridian Equity Income
Performance |
| Timeline |
| Gateway Fund Class |
| Meridian Equity Income |
Gateway Fund and Meridian Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gateway Fund and Meridian Equity
The main advantage of trading using opposite Gateway Fund and Meridian Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gateway Fund 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.| Gateway Fund vs. Fidelity Managed Retirement | Gateway Fund vs. Target Retirement 2040 | Gateway Fund vs. Calvert Moderate Allocation | Gateway Fund vs. Transamerica Cleartrack Retirement |
| Meridian Equity vs. Touchstone Premium Yield | Meridian Equity vs. Ultra Short Fixed Income | Meridian Equity vs. Maryland Tax Free Bond | Meridian Equity vs. Bbh Intermediate Municipal |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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