Correlation Between Meridian Growth and Kensington Active
Can any of the company-specific risk be diversified away by investing in both Meridian Growth and Kensington Active 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 Meridian Growth and Kensington Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meridian Growth Fund and Kensington Active Advantage, you can compare the effects of market volatilities on Meridian Growth and Kensington Active 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 Meridian Growth with a short position of Kensington Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Growth and Kensington Active.
Diversification Opportunities for Meridian Growth and Kensington Active
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Meridian and Kensington is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Growth Fund and Kensington Active Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Active and Meridian Growth 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 Meridian Growth Fund are associated (or correlated) with Kensington Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Active has no effect on the direction of Meridian Growth i.e., Meridian Growth and Kensington Active go up and down completely randomly.
Pair Corralation between Meridian Growth and Kensington Active
Assuming the 90 days horizon Meridian Growth Fund is expected to generate 2.94 times more return on investment than Kensington Active. However, Meridian Growth is 2.94 times more volatile than Kensington Active Advantage. It trades about 0.31 of its potential returns per unit of risk. Kensington Active Advantage is currently generating about 0.36 per unit of risk. If you would invest 3,580 in Meridian Growth Fund on September 2, 2024 and sell it today you would earn a total of 292.00 from holding Meridian Growth Fund or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meridian Growth Fund vs. Kensington Active Advantage
Performance |
| Timeline |
| Meridian Growth |
| Kensington Active |
Meridian Growth and Kensington Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Growth and Kensington Active
The main advantage of trading using opposite Meridian Growth and Kensington Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Growth position performs unexpectedly, Kensington Active 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 Kensington Active will offset losses from the drop in Kensington Active's long position.| Meridian Growth vs. Lord Abbett Health | Meridian Growth vs. Live Oak Health | Meridian Growth vs. Fidelity Advisor Health | Meridian Growth vs. Invesco Global Health |
| Kensington Active vs. Kensington Defender Institutional | Kensington Active vs. Kensington Active Advantage | Kensington Active vs. Kensington Dynamic Growth | Kensington Active vs. Kensington Dynamic Growth |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |