Correlation Between Marsico Focus and Dreyfus Appreciation

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

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

Diversification Opportunities for Marsico Focus and Dreyfus Appreciation

0.83

Correlation Coefficient

Marsico Focus  Dreyfus Appreciation

Very poor diversification

The 3 months correlation between Marsico and Dreyfus is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Marsico Focus Fund and Dreyfus Appreciation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Appreciation and Marsico Focus 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 Marsico Focus Fund are associated (or correlated) with Dreyfus Appreciation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Appreciation has no effect on the direction of Marsico Focus i.e., Marsico Focus and Dreyfus Appreciation go up and down completely randomly.

Pair Corralation between Marsico Focus and Dreyfus Appreciation

Assuming the 90 days horizon Marsico Focus Fund is expected to generate 1.42 times more return on investment than Dreyfus Appreciation. However, Marsico Focus is 1.42 times more volatile than Dreyfus Appreciation Fund. It trades about 0.34 of its potential returns per unit of risk. Dreyfus Appreciation Fund is currently generating about 0.3 per unit of risk. If you would invest  2,925  in Marsico Focus Fund on September 1, 2024 and sell it today you would earn a total of  215.00  from holding Marsico Focus Fund or generate 7.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Marsico Focus Fund  vs.  Dreyfus Appreciation Fund

Marsico Focus

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marsico Focus Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Marsico Focus may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Dreyfus Appreciation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Appreciation Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Dreyfus Appreciation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Marsico Focus and Dreyfus Appreciation

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

The idea behind Marsico Focus Fund and Dreyfus Appreciation 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.