Correlation Between Meridian Growth and Royce Micro
Can any of the company-specific risk be diversified away by investing in both Meridian Growth and Royce Micro 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 Royce Micro 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 Royce Micro Cap Fund, you can compare the effects of market volatilities on Meridian Growth and Royce Micro 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 Royce Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Growth and Royce Micro.
Diversification Opportunities for Meridian Growth and Royce Micro
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Meridian and Royce is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Growth Fund and Royce Micro Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Micro Cap 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 Royce Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Micro Cap has no effect on the direction of Meridian Growth i.e., Meridian Growth and Royce Micro go up and down completely randomly.
Pair Corralation between Meridian Growth and Royce Micro
Assuming the 90 days horizon Meridian Growth Fund is expected to generate 0.31 times more return on investment than Royce Micro. However, Meridian Growth Fund is 3.28 times less risky than Royce Micro. It trades about -0.05 of its potential returns per unit of risk. Royce Micro Cap Fund is currently generating about -0.13 per unit of risk. If you would invest 3,828 in Meridian Growth Fund on September 14, 2024 and sell it today you would lose (34.00) from holding Meridian Growth Fund or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meridian Growth Fund vs. Royce Micro Cap Fund
Performance |
| Timeline |
| Meridian Growth |
| Royce Micro Cap |
Meridian Growth and Royce Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Growth and Royce Micro
The main advantage of trading using opposite Meridian Growth and Royce Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Growth position performs unexpectedly, Royce Micro 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 Royce Micro will offset losses from the drop in Royce Micro's long position.| Meridian Growth vs. Meridian Small Cap | Meridian Growth vs. Meridian Small Cap | Meridian Growth vs. Fidelity Small Cap | Meridian Growth vs. Driehaus Micro Cap |
| Royce Micro vs. Meridian Growth Fund | Royce Micro vs. Royce Total Return | Royce Micro vs. Meridian Trarian Fund | Royce Micro vs. Royce Premier 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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