Correlation Between Wilmington Large-cap and Meridian Small
Can any of the company-specific risk be diversified away by investing in both Wilmington Large-cap and Meridian Small 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 Wilmington Large-cap and Meridian Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilmington Large Cap Strategy and Meridian Small Cap, you can compare the effects of market volatilities on Wilmington Large-cap and Meridian Small 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 Wilmington Large-cap with a short position of Meridian Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmington Large-cap and Meridian Small.
Diversification Opportunities for Wilmington Large-cap and Meridian Small
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wilmington and Meridian is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Large Cap Strategy and Meridian Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Small Cap and Wilmington Large-cap 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 Wilmington Large Cap Strategy are associated (or correlated) with Meridian Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Small Cap has no effect on the direction of Wilmington Large-cap i.e., Wilmington Large-cap and Meridian Small go up and down completely randomly.
Pair Corralation between Wilmington Large-cap and Meridian Small
Assuming the 90 days horizon Wilmington Large Cap Strategy is expected to generate 0.72 times more return on investment than Meridian Small. However, Wilmington Large Cap Strategy is 1.39 times less risky than Meridian Small. It trades about 0.14 of its potential returns per unit of risk. Meridian Small Cap is currently generating about 0.09 per unit of risk. If you would invest 3,018 in Wilmington Large Cap Strategy on September 1, 2024 and sell it today you would earn a total of 471.00 from holding Wilmington Large Cap Strategy or generate 15.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wilmington Large Cap Strategy vs. Meridian Small Cap
Performance |
| Timeline |
| Wilmington Large Cap |
| Meridian Small Cap |
Wilmington Large-cap and Meridian Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilmington Large-cap and Meridian Small
The main advantage of trading using opposite Wilmington Large-cap and Meridian Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmington Large-cap position performs unexpectedly, Meridian Small 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 Small will offset losses from the drop in Meridian Small's long position.| Wilmington Large-cap vs. Wilmington Multi Manager Real | Wilmington Large-cap vs. Ab Centrated Growth | Wilmington Large-cap vs. T Rowe Price | Wilmington Large-cap vs. T Rowe Price |
| Meridian Small vs. Meridian Equity Income | Meridian Small vs. Meridian Equity Income | Meridian Small vs. Meridian Growth Fund | Meridian Small 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |