Correlation Between Value Fund and Meridian Contrarian
Can any of the company-specific risk be diversified away by investing in both Value Fund and Meridian Contrarian 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 Value Fund and Meridian Contrarian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Fund Value and Meridian Trarian Fund, you can compare the effects of market volatilities on Value Fund and Meridian Contrarian 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 Value Fund with a short position of Meridian Contrarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Fund and Meridian Contrarian.
Diversification Opportunities for Value Fund and Meridian Contrarian
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Value and Meridian is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Value Fund Value and Meridian Trarian Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Contrarian and Value Fund 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 Value Fund Value are associated (or correlated) with Meridian Contrarian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Contrarian has no effect on the direction of Value Fund i.e., Value Fund and Meridian Contrarian go up and down completely randomly.
Pair Corralation between Value Fund and Meridian Contrarian
Assuming the 90 days horizon Value Fund is expected to generate 1.19 times less return on investment than Meridian Contrarian. But when comparing it to its historical volatility, Value Fund Value is 1.26 times less risky than Meridian Contrarian. It trades about 0.08 of its potential returns per unit of risk. Meridian Trarian Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,709 in Meridian Trarian Fund on September 1, 2024 and sell it today you would earn a total of 566.00 from holding Meridian Trarian Fund or generate 15.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Value Fund Value vs. Meridian Trarian Fund
Performance |
| Timeline |
| Value Fund Value |
| Meridian Contrarian |
Value Fund and Meridian Contrarian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Fund and Meridian Contrarian
The main advantage of trading using opposite Value Fund and Meridian Contrarian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Fund position performs unexpectedly, Meridian Contrarian 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 Contrarian will offset losses from the drop in Meridian Contrarian's long position.| Value Fund vs. Partners Value Fund | Value Fund vs. Clipper Fund Inc | Value Fund vs. Longleaf Partners Fund | Value Fund vs. Third Avenue Value |
| Meridian Contrarian vs. Meridian Growth Fund | Meridian Contrarian vs. Clipper Fund Inc | Meridian Contrarian vs. Mairs Power Growth | Meridian Contrarian vs. Thompson Largecap Fund |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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