Correlation Between Meridian Growth and Royce Total
Can any of the company-specific risk be diversified away by investing in both Meridian Growth and Royce Total 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 Total 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 Total Return, you can compare the effects of market volatilities on Meridian Growth and Royce Total 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 Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Growth and Royce Total.
Diversification Opportunities for Meridian Growth and Royce Total
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Meridian and Royce is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Growth Fund and Royce Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Total Return 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 Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Total Return has no effect on the direction of Meridian Growth i.e., Meridian Growth and Royce Total go up and down completely randomly.
Pair Corralation between Meridian Growth and Royce Total
Assuming the 90 days horizon Meridian Growth Fund is expected to generate 0.74 times more return on investment than Royce Total. However, Meridian Growth Fund is 1.35 times less risky than Royce Total. It trades about 0.07 of its potential returns per unit of risk. Royce Total Return is currently generating about 0.02 per unit of risk. If you would invest 3,612 in Meridian Growth Fund on October 26, 2024 and sell it today you would earn a total of 160.00 from holding Meridian Growth Fund or generate 4.43% return on investment 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 Total Return
Performance |
| Timeline |
| Meridian Growth |
| Royce Total Return |
Meridian Growth and Royce Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Growth and Royce Total
The main advantage of trading using opposite Meridian Growth and Royce Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Growth position performs unexpectedly, Royce Total 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 Total will offset losses from the drop in Royce Total's long position.| Meridian Growth vs. Alger Health Sciences | Meridian Growth vs. Live Oak Health | Meridian Growth vs. Highland Longshort Healthcare | Meridian Growth vs. Invesco Global Health |
| Royce Total vs. Baron Health Care | Royce Total vs. Invesco Global Health | Royce Total vs. Highland Longshort Healthcare | Royce Total vs. Health Care 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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