Correlation Between Marsico Focus and Selected American
Can any of the company-specific risk be diversified away by investing in both Marsico Focus and Selected American 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 Selected American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marsico Focus Fund and Selected American Shares, you can compare the effects of market volatilities on Marsico Focus and Selected American 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 Selected American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marsico Focus and Selected American.
Diversification Opportunities for Marsico Focus and Selected American
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marsico and Selected is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Marsico Focus Fund and Selected American Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selected American Shares 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 Fund are associated (or correlated) with Selected American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selected American Shares has no effect on the direction of Marsico Focus i.e., Marsico Focus and Selected American go up and down completely randomly.
Pair Corralation between Marsico Focus and Selected American
Assuming the 90 days horizon Marsico Focus Fund is expected to generate 0.87 times more return on investment than Selected American. However, Marsico Focus Fund is 1.15 times less risky than Selected American. It trades about -0.08 of its potential returns per unit of risk. Selected American Shares is currently generating about -0.11 per unit of risk. If you would invest 3,173 in Marsico Focus Fund on December 1, 2024 and sell it today you would lose (239.00) from holding Marsico Focus Fund or give up 7.53% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Marsico Focus Fund vs. Selected American Shares
Performance |
Timeline |
Marsico Focus |
Selected American Shares |
Marsico Focus and Selected American Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Marsico Focus and Selected American
The main advantage of trading using opposite Marsico Focus and Selected American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marsico Focus position performs unexpectedly, Selected American 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 Selected American will offset losses from the drop in Selected American's long position.Marsico Focus vs. Marsico Growth Fund | Marsico Focus vs. T Rowe Price | Marsico Focus vs. Short Term Fund Administrative | Marsico Focus vs. Selected American Shares |
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Check out your portfolio center.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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