Correlation Between Marsico 21st and Hodges Fund

Can any of the company-specific risk be diversified away by investing in both Marsico 21st and Hodges Fund 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 21st and Hodges Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marsico 21st Century and Hodges Fund Retail, you can compare the effects of market volatilities on Marsico 21st and Hodges Fund 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 21st with a short position of Hodges Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marsico 21st and Hodges Fund.

Diversification Opportunities for Marsico 21st and Hodges Fund

0.97

Correlation Coefficient

Marsico 21st  Hodges Fund

Almost no diversification

The 3 months correlation between Marsico and Hodges is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Marsico 21st Century and Hodges Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Fund Retail and Marsico 21st 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 21st Century are associated (or correlated) with Hodges Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hodges Fund Retail has no effect on the direction of Marsico 21st i.e., Marsico 21st and Hodges Fund go up and down completely randomly.

Pair Corralation between Marsico 21st and Hodges Fund

Assuming the 90 days horizon Marsico 21st Century is expected to generate 0.76 times more return on investment than Hodges Fund. However, Marsico 21st Century is 1.31 times less risky than Hodges Fund. It trades about -0.03 of its potential returns per unit of risk. Hodges Fund Retail is currently generating about -0.04 per unit of risk. If you would invest  4,994  in Marsico 21st Century on December 29, 2024 and sell it today you would lose (161.00) from holding Marsico 21st Century or give up 3.22% of portfolio value over 90 days.

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

Marsico 21st Century  vs.  Hodges Fund Retail

Marsico 21st Century

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marsico 21st Century has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Marsico 21st is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hodges Fund Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hodges Fund Retail has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Hodges Fund 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 21st and Hodges Fund

The main advantage of trading using opposite Marsico 21st and Hodges Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marsico 21st position performs unexpectedly, Hodges Fund 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 Hodges Fund will offset losses from the drop in Hodges Fund's long position.

The idea behind Marsico 21st Century and Hodges Fund Retail 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.