Correlation Between Meridian Equity and Aqr Small
Can any of the company-specific risk be diversified away by investing in both Meridian Equity and Aqr Small 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 Equity and Aqr Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meridian Equity Income and Aqr Small Cap, you can compare the effects of market volatilities on Meridian Equity and Aqr Small 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 Equity with a short position of Aqr Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Equity and Aqr Small.
Diversification Opportunities for Meridian Equity and Aqr Small
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Meridian and Aqr is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Equity Income and Aqr Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Small Cap and Meridian Equity 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 Equity Income are associated (or correlated) with Aqr Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Small Cap has no effect on the direction of Meridian Equity i.e., Meridian Equity and Aqr Small go up and down completely randomly.
Pair Corralation between Meridian Equity and Aqr Small
Assuming the 90 days horizon Meridian Equity Income is expected to generate 0.48 times more return on investment than Aqr Small. However, Meridian Equity Income is 2.1 times less risky than Aqr Small. It trades about 0.02 of its potential returns per unit of risk. Aqr Small Cap is currently generating about -0.02 per unit of risk. If you would invest 1,483 in Meridian Equity Income on September 13, 2024 and sell it today you would earn a total of 2.00 from holding Meridian Equity Income or generate 0.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Meridian Equity Income vs. Aqr Small Cap
Performance |
| Timeline |
| Meridian Equity Income |
| Aqr Small Cap |
Meridian Equity and Aqr Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Equity and Aqr Small
The main advantage of trading using opposite Meridian Equity and Aqr Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Equity position performs unexpectedly, Aqr Small 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 Aqr Small will offset losses from the drop in Aqr Small's long position.| Meridian Equity vs. Mesirow Financial Small | Meridian Equity vs. Icon Financial Fund | Meridian Equity vs. Gabelli Global Financial | Meridian Equity vs. 1919 Financial Services |
| Aqr Small vs. Hennessy Bp Energy | Aqr Small vs. Gmo Resources | Aqr Small vs. Alpsalerian Energy Infrastructure | Aqr Small vs. Icon Natural Resources |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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