Correlation Between Heartland Value and Meridian Growth
Can any of the company-specific risk be diversified away by investing in both Heartland Value and Meridian Growth 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 Heartland Value and Meridian Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heartland Value Fund and Meridian Growth Fund, you can compare the effects of market volatilities on Heartland Value and Meridian Growth 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 Heartland Value with a short position of Meridian Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Value and Meridian Growth.
Diversification Opportunities for Heartland Value and Meridian Growth
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heartland and Meridian is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Fund and Meridian Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Growth and Heartland Value 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 Heartland Value Fund are associated (or correlated) with Meridian Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Growth has no effect on the direction of Heartland Value i.e., Heartland Value and Meridian Growth go up and down completely randomly.
Pair Corralation between Heartland Value and Meridian Growth
Assuming the 90 days horizon Heartland Value Fund is expected to generate 1.27 times more return on investment than Meridian Growth. However, Heartland Value is 1.27 times more volatile than Meridian Growth Fund. It trades about 0.12 of its potential returns per unit of risk. Meridian Growth Fund is currently generating about 0.06 per unit of risk. If you would invest 4,769 in Heartland Value Fund on October 23, 2024 and sell it today you would earn a total of 98.00 from holding Heartland Value Fund or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heartland Value Fund vs. Meridian Growth Fund
Performance |
| Timeline |
| Heartland Value |
| Meridian Growth |
Heartland Value and Meridian Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Value and Meridian Growth
The main advantage of trading using opposite Heartland Value and Meridian Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Value position performs unexpectedly, Meridian Growth 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 Growth will offset losses from the drop in Meridian Growth's long position.| Heartland Value vs. Muhlenkamp Fund Institutional | Heartland Value vs. Heartland Value Plus | Heartland Value vs. Buffalo Small Cap | Heartland Value vs. Aggressive Investors 1 |
| Meridian Growth vs. Smallcap Fund Fka | Meridian Growth vs. Tax Managed Mid Small | Meridian Growth vs. Glg Intl Small | Meridian Growth vs. Needham Small 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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