Correlation Between Meridian Small and Meridian Contrarian
Can any of the company-specific risk be diversified away by investing in both Meridian Small and Meridian Contrarian 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 Small and Meridian Contrarian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meridian Small Cap and Meridian Trarian Fund, you can compare the effects of market volatilities on Meridian Small and Meridian Contrarian 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 Small with a short position of Meridian Contrarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Small and Meridian Contrarian.
Diversification Opportunities for Meridian Small and Meridian Contrarian
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Meridian and Meridian is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Small Cap and Meridian Trarian Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Contrarian and Meridian Small 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 Small Cap are associated (or correlated) with Meridian Contrarian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Contrarian has no effect on the direction of Meridian Small i.e., Meridian Small and Meridian Contrarian go up and down completely randomly.
Pair Corralation between Meridian Small and Meridian Contrarian
Assuming the 90 days horizon Meridian Small is expected to generate 1.17 times less return on investment than Meridian Contrarian. In addition to that, Meridian Small is 1.14 times more volatile than Meridian Trarian Fund. It trades about 0.35 of its total potential returns per unit of risk. Meridian Trarian Fund is currently generating about 0.46 per unit of volatility. If you would invest 3,444 in Meridian Trarian Fund on September 1, 2024 and sell it today you would earn a total of 370.00 from holding Meridian Trarian Fund or generate 10.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meridian Small Cap vs. Meridian Trarian Fund
Performance |
| Timeline |
| Meridian Small Cap |
| Meridian Contrarian |
Meridian Small and Meridian Contrarian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Small and Meridian Contrarian
The main advantage of trading using opposite Meridian Small and Meridian Contrarian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Small position performs unexpectedly, Meridian Contrarian 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 Contrarian will offset losses from the drop in Meridian Contrarian's long position.| Meridian Small vs. Meridian Equity Income | Meridian Small vs. Meridian Equity Income | Meridian Small vs. Meridian Growth Fund | Meridian Small vs. Meridian Equity Income |
| Meridian Contrarian vs. Meridian Trarian Fund | Meridian Contrarian vs. Fidelity Advisor Mid | Meridian Contrarian vs. Boston Trust Midcap | Meridian Contrarian vs. Tarkio Fund Tarkio |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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