Correlation Between International Equity and Scharf Global
Can any of the company-specific risk be diversified away by investing in both International Equity and Scharf 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 International Equity and Scharf Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The International Equity and Scharf Global Opportunity, you can compare the effects of market volatilities on International Equity and Scharf 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 International Equity with a short position of Scharf Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Equity and Scharf Global.
Diversification Opportunities for International Equity and Scharf Global
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between International and Scharf is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding The International Equity and Scharf Global Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scharf Global Opportunity and International 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 The International Equity are associated (or correlated) with Scharf Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scharf Global Opportunity has no effect on the direction of International Equity i.e., International Equity and Scharf Global go up and down completely randomly.
Pair Corralation between International Equity and Scharf Global
Assuming the 90 days horizon The International Equity is expected to under-perform the Scharf Global. In addition to that, International Equity is 1.15 times more volatile than Scharf Global Opportunity. It trades about -0.05 of its total potential returns per unit of risk. Scharf Global Opportunity is currently generating about 0.37 per unit of volatility. If you would invest 3,642 in Scharf Global Opportunity on September 4, 2024 and sell it today you would earn a total of 172.00 from holding Scharf Global Opportunity or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The International Equity vs. Scharf Global Opportunity
Performance |
| Timeline |
| The International Equity |
| Scharf Global Opportunity |
International Equity and Scharf Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Equity and Scharf Global
The main advantage of trading using opposite International Equity and Scharf Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Equity position performs unexpectedly, Scharf 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 Scharf Global will offset losses from the drop in Scharf Global's long position.| International Equity vs. Us Government Plus | International Equity vs. Inverse Government Long | International Equity vs. Franklin Adjustable Government | International Equity vs. Aig Government Money |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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