Correlation Between Sarofim Equity and Marsico Global

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

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

Diversification Opportunities for Sarofim Equity and Marsico Global

0.23

Correlation Coefficient

Sarofim Equity  Marsico Global

Modest diversification

The 3 months correlation between Sarofim and Marsico is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sarofim Equity and Marsico Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Global and Sarofim Equity 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 Sarofim Equity are associated (or correlated) with Marsico Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsico Global has no effect on the direction of Sarofim Equity i.e., Sarofim Equity and Marsico Global go up and down completely randomly.

Pair Corralation between Sarofim Equity and Marsico Global

Assuming the 90 days horizon Sarofim Equity is expected to under-perform the Marsico Global. In addition to that, Sarofim Equity is 1.18 times more volatile than Marsico Global. It trades about -0.06 of its total potential returns per unit of risk. Marsico Global is currently generating about 0.05 per unit of volatility. If you would invest  2,459  in Marsico Global on September 30, 2024 and sell it today you would earn a total of  177.00  from holding Marsico Global or generate 7.2% return on investment over 90 days.

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

Sarofim Equity  vs.  Marsico Global

Sarofim Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sarofim Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Marsico Global

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marsico Global are ranked lower than 4 (%) 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.

Pair Trading with Sarofim Equity and Marsico Global

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

The idea behind Sarofim Equity and Marsico Global 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.