Correlation Between Dodge Global and Marsico Growth

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

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

Diversification Opportunities for Dodge Global and Marsico Growth

0.02

Correlation Coefficient

Dodge Global  Marsico Growth

Significant diversification

The 3 months correlation between Dodge and Marsico is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Global Stock and Marsico Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Growth and Dodge Global 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 Dodge Global Stock 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 Dodge Global i.e., Dodge Global and Marsico Growth go up and down completely randomly.

Pair Corralation between Dodge Global and Marsico Growth

Assuming the 90 days horizon Dodge Global is expected to generate 2.74 times less return on investment than Marsico Growth. But when comparing it to its historical volatility, Dodge Global Stock is 1.51 times less risky than Marsico Growth. It trades about 0.07 of its potential returns per unit of risk. Marsico Growth Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,830  in Marsico Growth Fund on September 12, 2024 and sell it today you would earn a total of  1,043  from holding Marsico Growth Fund or generate 56.99% return on investment over 90 days.

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

Dodge Global Stock  vs.  Marsico Growth Fund

Dodge Global Stock

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Global Stock are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dodge Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 January 2025.

Pair Trading with Dodge Global and Marsico Growth

The main advantage of trading using opposite Dodge Global and Marsico Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Global 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 Dodge Global Stock 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.