Correlation Between Virtus Kar and Meridian Growth
Can any of the company-specific risk be diversified away by investing in both Virtus Kar and Meridian Growth 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 Virtus Kar and Meridian Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virtus Kar Small Cap and Meridian Growth Fund, you can compare the effects of market volatilities on Virtus Kar and Meridian Growth 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 Virtus Kar with a short position of Meridian Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Kar and Meridian Growth.
Diversification Opportunities for Virtus Kar and Meridian Growth
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Virtus and Meridian is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Kar Small Cap and Meridian Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Growth and Virtus Kar 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 Virtus Kar Small Cap are associated (or correlated) with Meridian Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Growth has no effect on the direction of Virtus Kar i.e., Virtus Kar and Meridian Growth go up and down completely randomly.
Pair Corralation between Virtus Kar and Meridian Growth
Assuming the 90 days horizon Virtus Kar Small Cap is expected to generate 1.12 times more return on investment than Meridian Growth. However, Virtus Kar is 1.12 times more volatile than Meridian Growth Fund. It trades about 0.37 of its potential returns per unit of risk. Meridian Growth Fund is currently generating about 0.34 per unit of risk. If you would invest 5,286 in Virtus Kar Small Cap on September 1, 2024 and sell it today you would earn a total of 572.00 from holding Virtus Kar Small Cap or generate 10.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Virtus Kar Small Cap vs. Meridian Growth Fund
Performance |
| Timeline |
| Virtus Kar Small |
| Meridian Growth |
Virtus Kar and Meridian Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virtus Kar and Meridian Growth
The main advantage of trading using opposite Virtus Kar and Meridian Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Kar position performs unexpectedly, Meridian Growth 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 Growth will offset losses from the drop in Meridian Growth's long position.| Virtus Kar vs. Virtus Kar Small Cap | Virtus Kar vs. Virtus Kar Small Cap | Virtus Kar vs. Virtus Kar Small Cap | Virtus Kar vs. Virtus Kar Mid Cap |
| Meridian Growth vs. Meridian Equity Income | Meridian Growth vs. Meridian Equity Income | Meridian Growth vs. Meridian Growth Fund | Meridian Growth vs. Meridian Equity 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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