Correlation Between Qs Defensive and Marsico Focus

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

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

Diversification Opportunities for Qs Defensive and Marsico Focus

0.48

Correlation Coefficient

Qs Defensive  Marsico Focus

Very weak diversification

The 3 months correlation between LMLRX and Marsico is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Qs Defensive Growth and Marsico Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Focus and Qs Defensive 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 Qs Defensive Growth 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 Qs Defensive i.e., Qs Defensive and Marsico Focus go up and down completely randomly.

Pair Corralation between Qs Defensive and Marsico Focus

Assuming the 90 days horizon Qs Defensive Growth is expected to generate 0.28 times more return on investment than Marsico Focus. However, Qs Defensive Growth is 3.63 times less risky than Marsico Focus. It trades about 0.03 of its potential returns per unit of risk. Marsico Focus is currently generating about -0.09 per unit of risk. If you would invest  1,295  in Qs Defensive Growth on December 23, 2024 and sell it today you would earn a total of  9.00  from holding Qs Defensive Growth or generate 0.69% return on investment over 90 days.

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

Qs Defensive Growth  vs.  Marsico Focus

Qs Defensive Growth

Risk-Adjusted Performance

Weak

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

Marsico Focus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marsico Focus has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Qs Defensive and Marsico Focus

The main advantage of trading using opposite Qs Defensive and Marsico Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs Defensive 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 Qs Defensive Growth and Marsico Focus 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.