Correlation Between Meridian Contrarian and Madison Investors
Can any of the company-specific risk be diversified away by investing in both Meridian Contrarian and Madison Investors 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 Madison Investors 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 Madison Investors Fund, you can compare the effects of market volatilities on Meridian Contrarian and Madison Investors 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 Madison Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridian Contrarian and Madison Investors.
Diversification Opportunities for Meridian Contrarian and Madison Investors
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Meridian and Madison is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Trarian Fund and Madison Investors Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Investors 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 Madison Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Investors has no effect on the direction of Meridian Contrarian i.e., Meridian Contrarian and Madison Investors go up and down completely randomly.
Pair Corralation between Meridian Contrarian and Madison Investors
Assuming the 90 days horizon Meridian Trarian Fund is expected to generate 1.13 times more return on investment than Madison Investors. However, Meridian Contrarian is 1.13 times more volatile than Madison Investors Fund. It trades about 0.36 of its potential returns per unit of risk. Madison Investors Fund is currently generating about 0.23 per unit of risk. If you would invest 3,905 in Meridian Trarian Fund on August 28, 2024 and sell it today you would earn a total of 354.00 from holding Meridian Trarian Fund or generate 9.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meridian Trarian Fund vs. Madison Investors Fund
Performance |
| Timeline |
| Meridian Contrarian |
| Madison Investors |
Meridian Contrarian and Madison Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridian Contrarian and Madison Investors
The main advantage of trading using opposite Meridian Contrarian and Madison Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Contrarian position performs unexpectedly, Madison Investors 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 Madison Investors will offset losses from the drop in Madison Investors' 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 |
| Madison Investors vs. Madison Mid Cap | Madison Investors vs. Fam Value Fund | Madison Investors vs. Sound Shore Fund | Madison Investors vs. Madison Dividend Income |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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