Correlation Between Marsico Global and Kinetics Small

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

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

Diversification Opportunities for Marsico Global and Kinetics Small

0.55

Correlation Coefficient

Marsico Global  Kinetics Small

Very weak diversification

The 3 months correlation between Marsico and Kinetics is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Marsico Global and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap and Marsico Global 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 Global are associated (or correlated) with Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Marsico Global i.e., Marsico Global and Kinetics Small go up and down completely randomly.

Pair Corralation between Marsico Global and Kinetics Small

Assuming the 90 days horizon Marsico Global is expected to generate 0.47 times more return on investment than Kinetics Small. However, Marsico Global is 2.13 times less risky than Kinetics Small. It trades about -0.22 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about -0.51 per unit of risk. If you would invest  2,725  in Marsico Global on October 4, 2024 and sell it today you would lose (141.00) from holding Marsico Global or give up 5.17% of portfolio value over 90 days.

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

Marsico Global  vs.  Kinetics Small Cap

Marsico Global

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marsico Global are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Marsico Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kinetics Small Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Marsico Global and Kinetics Small

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

The idea behind Marsico Global and Kinetics Small Cap 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.