Correlation Between Marsico Focus and Gmo High

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

By analyzing existing cross correlation between Marsico Focus and Gmo High Yield, you can compare the effects of market volatilities on Marsico Focus and Gmo High 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 Gmo High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marsico Focus and Gmo High.

Diversification Opportunities for Marsico Focus and Gmo High

-0.25

Correlation Coefficient

Marsico Focus  Gmo High

Very good diversification

The 3 months correlation between Marsico and Gmo is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Marsico Focus and Gmo High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo High Yield 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 are associated (or correlated) with Gmo High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo High Yield has no effect on the direction of Marsico Focus i.e., Marsico Focus and Gmo High go up and down completely randomly.

Pair Corralation between Marsico Focus and Gmo High

Assuming the 90 days horizon Marsico Focus is expected to under-perform the Gmo High. In addition to that, Marsico Focus is 7.84 times more volatile than Gmo High Yield. It trades about -0.07 of its total potential returns per unit of risk. Gmo High Yield is currently generating about 0.14 per unit of volatility. If you would invest  1,663  in Gmo High Yield on December 28, 2024 and sell it today you would earn a total of  28.00  from holding Gmo High Yield or generate 1.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Marsico Focus  vs.  Gmo High Yield

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.

Gmo High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo High Yield are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gmo High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Marsico Focus and Gmo High

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

The idea behind Marsico Focus and Gmo High Yield 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.