Correlation Between Marsico Focus and Smallcap Growth

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

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

Diversification Opportunities for Marsico Focus and Smallcap Growth

0.91

Correlation Coefficient

Marsico Focus  Smallcap Growth

Almost no diversification

The 3 months correlation between Marsico and Smallcap is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Marsico Focus and Smallcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Growth 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 are associated (or correlated) with Smallcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Growth has no effect on the direction of Marsico Focus i.e., Marsico Focus and Smallcap Growth go up and down completely randomly.

Pair Corralation between Marsico Focus and Smallcap Growth

Assuming the 90 days horizon Marsico Focus is expected to generate 1.37 times less return on investment than Smallcap Growth. But when comparing it to its historical volatility, Marsico Focus is 1.02 times less risky than Smallcap Growth. It trades about 0.08 of its potential returns per unit of risk. Smallcap Growth Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,448  in Smallcap Growth Fund on September 12, 2024 and sell it today you would earn a total of  248.00  from holding Smallcap Growth Fund or generate 17.13% return on investment over 90 days.

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

Marsico Focus  vs.  Smallcap Growth Fund

Marsico Focus

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marsico Focus are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Marsico Focus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Smallcap Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Growth Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly abnormal basic indicators, Smallcap Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Marsico Focus and Smallcap Growth

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

The idea behind Marsico Focus and Smallcap 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.