Correlation Between Smallcap Growth and Marsico Focus

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

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

Diversification Opportunities for Smallcap Growth and Marsico Focus

0.96

Correlation Coefficient

Smallcap Growth  Marsico Focus

Almost no diversification

The 3 months correlation between Smallcap and Marsico is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Marsico Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Focus and Smallcap 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 Smallcap Growth Fund are associated (or correlated) with Marsico Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsico Focus has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Marsico Focus go up and down completely randomly.

Pair Corralation between Smallcap Growth and Marsico Focus

Assuming the 90 days horizon Smallcap Growth Fund is expected to under-perform the Marsico Focus. But the mutual fund apears to be less risky and, when comparing its historical volatility, Smallcap Growth Fund is 1.09 times less risky than Marsico Focus. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Marsico Focus is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  2,998  in Marsico Focus on December 30, 2024 and sell it today you would lose (283.00) from holding Marsico Focus or give up 9.44% of portfolio value over 90 days.

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

Smallcap Growth Fund  vs.  Marsico Focus

Smallcap Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smallcap Growth Fund 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.

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.

Pair Trading with Smallcap Growth and Marsico Focus

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

The idea behind Smallcap Growth Fund and Marsico Focus 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.