Correlation Between Growth Fund and Marsico Growth

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

By analyzing existing cross correlation between Growth Fund Of and Marsico Growth Fund, you can compare the effects of market volatilities on Growth Fund and Marsico Growth 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 Growth Fund with a short position of Marsico Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Marsico Growth.

Diversification Opportunities for Growth Fund and Marsico Growth

0.99

Correlation Coefficient

Growth Fund  Marsico Growth

No risk reduction

The 3 months correlation between Growth and Marsico is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Marsico Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Growth and Growth 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 Growth Fund Of are associated (or correlated) with Marsico Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsico Growth has no effect on the direction of Growth Fund i.e., Growth Fund and Marsico Growth go up and down completely randomly.

Pair Corralation between Growth Fund and Marsico Growth

Assuming the 90 days horizon Growth Fund is expected to generate 1.04 times less return on investment than Marsico Growth. But when comparing it to its historical volatility, Growth Fund Of is 1.09 times less risky than Marsico Growth. It trades about 0.22 of its potential returns per unit of risk. Marsico Growth Fund is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,494  in Marsico Growth Fund on September 2, 2024 and sell it today you would earn a total of  326.00  from holding Marsico Growth Fund or generate 13.07% return on investment over 90 days.

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

Growth Fund Of  vs.  Marsico Growth Fund

Growth Fund

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Fund Of are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Growth Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Marsico Growth

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marsico Growth Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Marsico Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Growth Fund and Marsico Growth

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

The idea behind Growth Fund Of and Marsico Growth 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.