Correlation Between Meridian Contrarian and Fam Value
Can any of the company-specific risk be diversified away by investing in both Meridian Contrarian and Fam Value 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 Contrarian and Fam Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meridian Trarian Fund and Fam Value Fund, you can compare the effects of market volatilities on Meridian Contrarian and Fam Value 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 Contrarian with a short position of Fam Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Contrarian and Fam Value.
Diversification Opportunities for Meridian Contrarian and Fam Value
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Meridian and Fam is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Trarian Fund and Fam Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fam Value Fund and Meridian Contrarian 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 Trarian Fund are associated (or correlated) with Fam Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fam Value Fund has no effect on the direction of Meridian Contrarian i.e., Meridian Contrarian and Fam Value go up and down completely randomly.
Pair Corralation between Meridian Contrarian and Fam Value
Assuming the 90 days horizon Meridian Trarian Fund is expected to under-perform the Fam Value. But the mutual fund apears to be less risky and, when comparing its historical volatility, Meridian Trarian Fund is 1.24 times less risky than Fam Value. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Fam Value Fund is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 11,163 in Fam Value Fund on November 4, 2024 and sell it today you would lose (786.00) from holding Fam Value Fund or give up 7.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meridian Trarian Fund vs. Fam Value Fund
Performance |
| Timeline |
| Meridian Contrarian |
| Fam Value Fund |
Meridian Contrarian and Fam Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Contrarian and Fam Value
The main advantage of trading using opposite Meridian Contrarian and Fam Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Contrarian position performs unexpectedly, Fam Value 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 Fam Value will offset losses from the drop in Fam Value's long position.| Meridian Contrarian vs. Meridian Growth Fund | Meridian Contrarian vs. Clipper Fund Inc | Meridian Contrarian vs. Mairs Power Growth | Meridian Contrarian vs. Thompson Largecap Fund |
| Fam Value vs. Fam Equity Income Fund | Fam Value vs. Meridian Growth Fund | Fam Value vs. Muhlenkamp Fund Institutional | Fam Value vs. Royce Pennsylvania Mutual |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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