Correlation Between Kinetics Small and Marsico Growth

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

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

Diversification Opportunities for Kinetics Small and Marsico Growth

0.9

Correlation Coefficient

Kinetics Small  Marsico Growth

Almost no diversification

The 3 months correlation between Kinetics and Marsico is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Marsico Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Growth and Kinetics Small 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 Kinetics Small Cap 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 Kinetics Small i.e., Kinetics Small and Marsico Growth go up and down completely randomly.

Pair Corralation between Kinetics Small and Marsico Growth

Assuming the 90 days horizon Kinetics Small Cap is expected to generate 2.04 times more return on investment than Marsico Growth. However, Kinetics Small is 2.04 times more volatile than Marsico Growth Fund. It trades about 0.4 of its potential returns per unit of risk. Marsico Growth Fund is currently generating about 0.2 per unit of risk. If you would invest  14,501  in Kinetics Small Cap on August 31, 2024 and sell it today you would earn a total of  8,650  from holding Kinetics Small Cap or generate 59.65% return on investment over 90 days.

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

Kinetics Small Cap  vs.  Marsico Growth Fund

Kinetics Small Cap

Risk-Adjusted Performance

31 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 31 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small showed solid returns over the last few months and may actually be approaching a breakup point.

Marsico Growth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marsico Growth Fund are ranked lower than 15 (%) 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 December 2024.

Pair Trading with Kinetics Small and Marsico Growth

The main advantage of trading using opposite Kinetics Small and Marsico Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small 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 Kinetics Small Cap 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.