Correlation Between Marsico Focus and Gmo High
Can any of the company-specific risk be diversified away by investing in both Marsico Focus and Gmo High 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 Gmo High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marsico Focus and Gmo High Yield, you can compare the effects of market volatilities on Marsico Focus and Gmo High 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 Gmo High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marsico Focus and Gmo High.
Diversification Opportunities for Marsico Focus and Gmo High
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Marsico and Gmo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Marsico Focus and Gmo High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo High Yield 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 Gmo High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo High Yield has no effect on the direction of Marsico Focus i.e., Marsico Focus and Gmo High go up and down completely randomly.
Pair Corralation between Marsico Focus and Gmo High
Assuming the 90 days horizon Marsico Focus is expected to generate 5.0 times more return on investment than Gmo High. However, Marsico Focus is 5.0 times more volatile than Gmo High Yield. It trades about 0.13 of its potential returns per unit of risk. Gmo High Yield is currently generating about 0.17 per unit of risk. If you would invest 3,155 in Marsico Focus on September 12, 2024 and sell it today you would earn a total of 71.00 from holding Marsico Focus or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marsico Focus vs. Gmo High Yield
Performance |
| Timeline |
| Marsico Focus |
| Gmo High Yield |
Marsico Focus and Gmo High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marsico Focus and Gmo High
The main advantage of trading using opposite Marsico Focus and Gmo High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marsico Focus position performs unexpectedly, Gmo High 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 Gmo High will offset losses from the drop in Gmo High's long position.| Marsico Focus vs. Tax Free Conservative Income | Marsico Focus vs. Stone Ridge Diversified | Marsico Focus vs. Prudential Core Conservative | Marsico Focus vs. Aqr Diversified Arbitrage |
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Check out your portfolio center.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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