Correlation Between Marsico Focus and Prudential Health

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

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

Diversification Opportunities for Marsico Focus and Prudential Health

-0.64

Correlation Coefficient

Marsico Focus  Prudential Health

Excellent diversification

The 3 months correlation between Marsico and Prudential is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Marsico Focus and Prudential Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Health 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 Prudential Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Health has no effect on the direction of Marsico Focus i.e., Marsico Focus and Prudential Health go up and down completely randomly.

Pair Corralation between Marsico Focus and Prudential Health

Assuming the 90 days horizon Marsico Focus is expected to generate 1.13 times more return on investment than Prudential Health. However, Marsico Focus is 1.13 times more volatile than Prudential Health Sciences. It trades about 0.19 of its potential returns per unit of risk. Prudential Health Sciences is currently generating about -0.08 per unit of risk. If you would invest  2,824  in Marsico Focus on September 2, 2024 and sell it today you would earn a total of  343.00  from holding Marsico Focus or generate 12.15% return on investment over 90 days.

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

Marsico Focus  vs.  Prudential Health Sciences

Marsico Focus

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marsico Focus are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Marsico Focus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Prudential Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Health Sciences has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Prudential Health 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 Prudential Health

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

The idea behind Marsico Focus and Prudential Health Sciences 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.