Correlation Between Meridian Contrarian and Columbia Seligman

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

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

Diversification Opportunities for Meridian Contrarian and Columbia Seligman

0.95

Correlation Coefficient

Meridian Contrarian  Columbia Seligman

Almost no diversification

The 3 months correlation between Meridian and Columbia is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Meridian Trarian Fund and Columbia Seligman Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Seligman Global and Meridian Contrarian 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 Meridian Trarian Fund are associated (or correlated) with Columbia Seligman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Seligman Global has no effect on the direction of Meridian Contrarian i.e., Meridian Contrarian and Columbia Seligman go up and down completely randomly.

Pair Corralation between Meridian Contrarian and Columbia Seligman

Assuming the 90 days horizon Meridian Trarian Fund is expected to generate 0.87 times more return on investment than Columbia Seligman. However, Meridian Trarian Fund is 1.14 times less risky than Columbia Seligman. It trades about 0.22 of its potential returns per unit of risk. Columbia Seligman Global is currently generating about 0.19 per unit of risk. If you would invest  3,715  in Meridian Trarian Fund on September 2, 2024 and sell it today you would earn a total of  505.00  from holding Meridian Trarian Fund or generate 13.59% return on investment over 90 days.

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

Meridian Trarian Fund  vs.  Columbia Seligman Global

Meridian Contrarian

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Meridian Trarian Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Meridian Contrarian showed solid returns over the last few months and may actually be approaching a breakup point.

Columbia Seligman Global

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Seligman Global are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Columbia Seligman may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Meridian Contrarian and Columbia Seligman

The main advantage of trading using opposite Meridian Contrarian and Columbia Seligman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridian Contrarian position performs unexpectedly, Columbia Seligman 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 Columbia Seligman will offset losses from the drop in Columbia Seligman's long position.

The idea behind Meridian Trarian Fund and Columbia Seligman Global 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 Global Correlations module to find global opportunities by holding instruments from different markets.