Correlation Between Royce Total and Meridian Growth
Can any of the company-specific risk be diversified away by investing in both Royce Total 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 Royce Total and Meridian Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royce Total Return and Meridian Growth Fund, you can compare the effects of market volatilities on Royce Total 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 Royce Total with a short position of Meridian Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Total and Meridian Growth.
Diversification Opportunities for Royce Total and Meridian Growth
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Royce and Meridian is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Royce Total Return and Meridian Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Growth and Royce Total 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 Royce Total Return 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 Royce Total i.e., Royce Total and Meridian Growth go up and down completely randomly.
Pair Corralation between Royce Total and Meridian Growth
Assuming the 90 days horizon Royce Total is expected to generate 2.47 times less return on investment than Meridian Growth. In addition to that, Royce Total is 1.35 times more volatile than Meridian Growth Fund. It trades about 0.02 of its total potential returns per unit of risk. Meridian Growth Fund is currently generating about 0.07 per unit of volatility. If you would invest 3,612 in Meridian Growth Fund on October 26, 2024 and sell it today you would earn a total of 160.00 from holding Meridian Growth Fund or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royce Total Return vs. Meridian Growth Fund
Performance |
| Timeline |
| Royce Total Return |
| Meridian Growth |
Royce Total and Meridian Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royce Total and Meridian Growth
The main advantage of trading using opposite Royce Total and Meridian Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royce Total 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.| Royce Total vs. Baron Health Care | Royce Total vs. Invesco Global Health | Royce Total vs. Highland Longshort Healthcare | Royce Total vs. Health Care Fund |
| Meridian Growth vs. Alger Health Sciences | Meridian Growth vs. Live Oak Health | Meridian Growth vs. Highland Longshort Healthcare | Meridian Growth vs. Invesco Global Health |
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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