Correlation Between Dreyfus Tax and Marsico Focus

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

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

Diversification Opportunities for Dreyfus Tax and Marsico Focus

-0.3

Correlation Coefficient

Dreyfus Tax  Marsico Focus

Very good diversification

The 3 months correlation between Dreyfus and Marsico is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Tax Managed and Marsico Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Focus and Dreyfus Tax 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 Dreyfus Tax Managed are associated (or correlated) with Marsico Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsico Focus has no effect on the direction of Dreyfus Tax i.e., Dreyfus Tax and Marsico Focus go up and down completely randomly.

Pair Corralation between Dreyfus Tax and Marsico Focus

Assuming the 90 days horizon Dreyfus Tax Managed is expected to under-perform the Marsico Focus. In addition to that, Dreyfus Tax is 1.92 times more volatile than Marsico Focus Fund. It trades about -0.21 of its total potential returns per unit of risk. Marsico Focus Fund is currently generating about -0.03 per unit of volatility. If you would invest  3,105  in Marsico Focus Fund on September 26, 2024 and sell it today you would lose (41.00) from holding Marsico Focus Fund or give up 1.32% of portfolio value over 90 days.

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

Dreyfus Tax Managed  vs.  Marsico Focus Fund

Dreyfus Tax Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfus Tax Managed has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Marsico Focus

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marsico Focus Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Marsico Focus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dreyfus Tax and Marsico Focus

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

The idea behind Dreyfus Tax Managed and Marsico Focus 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.