Correlation Between Tarkio Fund and Meridian Contrarian

Can any of the company-specific risk be diversified away by investing in both Tarkio 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 Tarkio 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 Tarkio Fund Tarkio and Meridian Trarian Fund, you can compare the effects of market volatilities on Tarkio 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 Tarkio Fund with a short position of Meridian Contrarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tarkio Fund and Meridian Contrarian.

Diversification Opportunities for Tarkio Fund and Meridian Contrarian

0.67

Correlation Coefficient

Tarkio Fund  Meridian Contrarian

Poor diversification

The 3 months correlation between Tarkio and Meridian is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Tarkio Fund Tarkio and Meridian Trarian Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Contrarian and Tarkio 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 Tarkio Fund Tarkio 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 Tarkio Fund i.e., Tarkio Fund and Meridian Contrarian go up and down completely randomly.

Pair Corralation between Tarkio Fund and Meridian Contrarian

Assuming the 90 days horizon Tarkio Fund Tarkio is expected to under-perform the Meridian Contrarian. In addition to that, Tarkio Fund is 1.12 times more volatile than Meridian Trarian Fund. It trades about -0.51 of its total potential returns per unit of risk. Meridian Trarian Fund is currently generating about -0.49 per unit of volatility. If you would invest  4,288  in Meridian Trarian Fund on October 2, 2024 and sell it today you would lose (453.00) from holding Meridian Trarian Fund or give up 10.56% of portfolio value over 90 days.

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

Tarkio Fund Tarkio  vs.  Meridian Trarian Fund

Tarkio Fund Tarkio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tarkio Fund Tarkio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Tarkio Fund 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

0 of 100

Very Weak

Over the last 90 days Meridian Trarian Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential 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 Tarkio Fund and Meridian Contrarian

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

The idea behind Tarkio Fund Tarkio 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.