Correlation Between Meridian Growth and Absolute Capital
Can any of the company-specific risk be diversified away by investing in both Meridian Growth and Absolute Capital 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 Absolute Capital 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 Absolute Capital Asset, you can compare the effects of market volatilities on Meridian Growth and Absolute Capital 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 Absolute Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Growth and Absolute Capital.
Diversification Opportunities for Meridian Growth and Absolute Capital
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meridian and Absolute is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Growth Fund and Absolute Capital Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Capital Asset 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 Absolute Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Capital Asset has no effect on the direction of Meridian Growth i.e., Meridian Growth and Absolute Capital go up and down completely randomly.
Pair Corralation between Meridian Growth and Absolute Capital
Assuming the 90 days horizon Meridian Growth Fund is expected to generate 1.46 times more return on investment than Absolute Capital. However, Meridian Growth is 1.46 times more volatile than Absolute Capital Asset. It trades about 0.05 of its potential returns per unit of risk. Absolute Capital Asset is currently generating about 0.05 per unit of risk. If you would invest 3,375 in Meridian Growth Fund on November 3, 2024 and sell it today you would earn a total of 414.00 from holding Meridian Growth Fund or generate 12.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Meridian Growth Fund vs. Absolute Capital Asset
Performance |
| Timeline |
| Meridian Growth |
| Absolute Capital Asset |
Meridian Growth and Absolute Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Growth and Absolute Capital
The main advantage of trading using opposite Meridian Growth and Absolute Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Growth position performs unexpectedly, Absolute Capital 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 Absolute Capital will offset losses from the drop in Absolute Capital's long position.| Meridian Growth vs. Catalyst Exceed Defined | Meridian Growth vs. Ab High Income | Meridian Growth vs. Rbc Bluebay Global | Meridian Growth vs. Calamos High Income |
| Absolute Capital vs. Alpsalerian Energy Infrastructure | Absolute Capital vs. Energy Services Fund | Absolute Capital vs. Goehring Rozencwajg Resources | Absolute Capital vs. Pimco Energy Tactical |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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