Correlation Between Meridian Growth and Muhlenkamp Fund
Can any of the company-specific risk be diversified away by investing in both Meridian Growth and Muhlenkamp Fund 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 Muhlenkamp Fund 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 Muhlenkamp Fund Institutional, you can compare the effects of market volatilities on Meridian Growth and Muhlenkamp Fund 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 Muhlenkamp Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Growth and Muhlenkamp Fund.
Diversification Opportunities for Meridian Growth and Muhlenkamp Fund
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Meridian and Muhlenkamp is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Growth Fund and Muhlenkamp Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muhlenkamp Fund Inst 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 Muhlenkamp Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muhlenkamp Fund Inst has no effect on the direction of Meridian Growth i.e., Meridian Growth and Muhlenkamp Fund go up and down completely randomly.
Pair Corralation between Meridian Growth and Muhlenkamp Fund
Assuming the 90 days horizon Meridian Growth is expected to generate 1.14 times less return on investment than Muhlenkamp Fund. In addition to that, Meridian Growth is 1.38 times more volatile than Muhlenkamp Fund Institutional. It trades about 0.05 of its total potential returns per unit of risk. Muhlenkamp Fund Institutional is currently generating about 0.09 per unit of volatility. If you would invest 5,509 in Muhlenkamp Fund Institutional on August 28, 2024 and sell it today you would earn a total of 1,888 from holding Muhlenkamp Fund Institutional or generate 34.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Meridian Growth Fund vs. Muhlenkamp Fund Institutional
Performance |
| Timeline |
| Meridian Growth |
| Muhlenkamp Fund Inst |
Meridian Growth and Muhlenkamp Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Growth and Muhlenkamp Fund
The main advantage of trading using opposite Meridian Growth and Muhlenkamp Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Growth position performs unexpectedly, Muhlenkamp Fund 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 Muhlenkamp Fund will offset losses from the drop in Muhlenkamp Fund's long position.| Meridian Growth vs. Invesco Porate Bond | Meridian Growth vs. Invesco Stock Fund | Meridian Growth vs. Invesco Growth And | Meridian Growth vs. Invesco Equity And |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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