Correlation Between Nasdaq and Marsico Growth

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

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

Diversification Opportunities for Nasdaq and Marsico Growth

0.81

Correlation Coefficient

Nasdaq  Marsico Growth

Very poor diversification

The 3 months correlation between Nasdaq and Marsico is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Marsico Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Growth and Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Marsico Growth go up and down completely randomly.

Pair Corralation between Nasdaq and Marsico Growth

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.97 times more return on investment than Marsico Growth. However, Nasdaq Inc is 1.03 times less risky than Marsico Growth. It trades about 0.12 of its potential returns per unit of risk. Marsico Growth is currently generating about 0.1 per unit of risk. If you would invest  5,611  in Nasdaq Inc on September 25, 2024 and sell it today you would earn a total of  2,280  from holding Nasdaq Inc or generate 40.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.6%
Values	Daily Returns

Nasdaq Inc  vs.  Marsico Growth

Nasdaq Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Marsico Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marsico Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Marsico Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq and Marsico Growth

The main advantage of trading using opposite Nasdaq and Marsico Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc and Marsico Growth 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.