Correlation Between Marsico Growth and American Century

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

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

Diversification Opportunities for Marsico Growth and American Century

0.94

Correlation Coefficient

Marsico Growth  American Century

Almost no diversification

The 3 months correlation between Marsico and American is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Marsico Growth Fund and American Century Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Small and Marsico Growth 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 Growth Fund are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Small has no effect on the direction of Marsico Growth i.e., Marsico Growth and American Century go up and down completely randomly.

Pair Corralation between Marsico Growth and American Century

Assuming the 90 days horizon Marsico Growth Fund is expected to generate 0.94 times more return on investment than American Century. However, Marsico Growth Fund is 1.06 times less risky than American Century. It trades about 0.13 of its potential returns per unit of risk. American Century Small is currently generating about 0.09 per unit of risk. If you would invest  2,038  in Marsico Growth Fund on September 12, 2024 and sell it today you would earn a total of  835.00  from holding Marsico Growth Fund or generate 40.97% return on investment over 90 days.

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

Marsico Growth Fund  vs.  American Century Small

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.

American Century Small

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Century Small are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, American Century may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Marsico Growth and American Century

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

The idea behind Marsico Growth Fund and American Century Small 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.