Correlation Between Mfs Mid and Meridian Contrarian

Can any of the company-specific risk be diversified away by investing in both Mfs Mid 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 Mfs Mid and Meridian Contrarian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mfs Mid Cap and Meridian Trarian Fund, you can compare the effects of market volatilities on Mfs Mid 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 Mfs Mid with a short position of Meridian Contrarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Mid and Meridian Contrarian.

Diversification Opportunities for Mfs Mid and Meridian Contrarian

0.82

Correlation Coefficient

Mfs Mid  Meridian Contrarian

Very poor diversification

The 3 months correlation between Mfs and Meridian is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Mid Cap and Meridian Trarian Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Contrarian and Mfs Mid 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 Mfs Mid Cap 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 Mfs Mid i.e., Mfs Mid and Meridian Contrarian go up and down completely randomly.

Pair Corralation between Mfs Mid and Meridian Contrarian

Assuming the 90 days horizon Mfs Mid Cap is expected to generate 0.98 times more return on investment than Meridian Contrarian. However, Mfs Mid Cap is 1.02 times less risky than Meridian Contrarian. It trades about 0.06 of its potential returns per unit of risk. Meridian Trarian Fund is currently generating about 0.03 per unit of risk. If you would invest  2,204  in Mfs Mid Cap on October 9, 2024 and sell it today you would earn a total of  699.00  from holding Mfs Mid Cap or generate 31.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Mfs Mid Cap  vs.  Meridian Trarian Fund

Mfs Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mfs Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Mfs Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Meridian Contrarian

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Meridian Trarian Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Meridian Contrarian is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mfs Mid and Meridian Contrarian

The main advantage of trading using opposite Mfs Mid and Meridian Contrarian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Mid 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.

The idea behind Mfs Mid Cap and Meridian Trarian Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.