Correlation Between Meridian Growth and Meridian Small
Can any of the company-specific risk be diversified away by investing in both Meridian Growth and Meridian 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 Growth and Meridian Small 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 Meridian Small Cap, you can compare the effects of market volatilities on Meridian Growth and Meridian 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 Growth with a short position of Meridian Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Growth and Meridian Small.
Diversification Opportunities for Meridian Growth and Meridian Small
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Meridian and Meridian is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Growth Fund and Meridian Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Small 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 Meridian Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Small Cap has no effect on the direction of Meridian Growth i.e., Meridian Growth and Meridian Small go up and down completely randomly.
Pair Corralation between Meridian Growth and Meridian Small
Assuming the 90 days horizon Meridian Growth is expected to generate 1.21 times less return on investment than Meridian Small. But when comparing it to its historical volatility, Meridian Growth Fund is 1.13 times less risky than Meridian Small. It trades about 0.04 of its potential returns per unit of risk. Meridian Small Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,211 in Meridian Small Cap on August 26, 2024 and sell it today you would earn a total of 179.00 from holding Meridian Small Cap or generate 14.78% 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. Meridian Small Cap
Performance |
| Timeline |
| Meridian Growth |
| Meridian Small Cap |
Meridian Growth and Meridian Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Growth and Meridian Small
The main advantage of trading using opposite Meridian Growth and Meridian Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Growth position performs unexpectedly, Meridian 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 Meridian Small will offset losses from the drop in Meridian Small'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 |
| Meridian Small vs. Meridian Small Cap | Meridian Small vs. Meridian Small Cap | Meridian Small vs. Meridian Small Cap | Meridian Small vs. Fidelity Small Cap |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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