Correlation Between Longleaf Partners and Meridian Contrarian
Can any of the company-specific risk be diversified away by investing in both Longleaf Partners 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 Longleaf Partners and Meridian Contrarian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Longleaf Partners Fund and Meridian Trarian Fund, you can compare the effects of market volatilities on Longleaf Partners 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 Longleaf Partners with a short position of Meridian Contrarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longleaf Partners and Meridian Contrarian.
Diversification Opportunities for Longleaf Partners and Meridian Contrarian
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Longleaf and MERIDIAN is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Longleaf Partners Fund and Meridian Trarian Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Contrarian and Longleaf Partners 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 Longleaf Partners Fund 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 Longleaf Partners i.e., Longleaf Partners and Meridian Contrarian go up and down completely randomly.
Pair Corralation between Longleaf Partners and Meridian Contrarian
Assuming the 90 days horizon Longleaf Partners is expected to generate 1.21 times less return on investment than Meridian Contrarian. But when comparing it to its historical volatility, Longleaf Partners Fund is 1.46 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 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,740 in Meridian Trarian Fund on August 29, 2024 and sell it today you would earn a total of 522.00 from holding Meridian Trarian Fund or generate 13.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longleaf Partners Fund vs. Meridian Trarian Fund
Performance |
| Timeline |
| Longleaf Partners |
| Meridian Contrarian |
Longleaf Partners and Meridian Contrarian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longleaf Partners and Meridian Contrarian
The main advantage of trading using opposite Longleaf Partners and Meridian Contrarian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longleaf Partners 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.| Longleaf Partners vs. Versatile Bond Portfolio | Longleaf Partners vs. California Bond Fund | Longleaf Partners vs. Barings Active Short | Longleaf Partners vs. Astor Longshort Fund |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |