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
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Meridian and MERIDIAN is 0.92. 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 Cap is expected to generate 1.18 times more return on investment than Meridian Contrarian. However, Meridian Small is 1.18 times more volatile than Meridian Trarian Fund. It trades about 0.02 of its potential returns per unit of risk. Meridian Trarian Fund is currently generating about 0.02 per unit of risk. If you would invest 1,126 in Meridian Small Cap on August 29, 2024 and sell it today you would earn a total of 95.00 from holding Meridian Small Cap or generate 8.44% 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 Small Cap | Meridian Small vs. Meridian Small Cap | Meridian Small vs. Emerald Banking And | Meridian Small vs. Fidelity Small Cap |
| Meridian Contrarian vs. Meridian Growth Fund | Meridian Contrarian vs. Clipper Fund Inc | Meridian Contrarian vs. Mairs Power Growth | Meridian Contrarian vs. Thompson Largecap 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |