Correlation Between Gmo Equity and Scharf Fund
Can any of the company-specific risk be diversified away by investing in both Gmo Equity and Scharf 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 Gmo Equity and Scharf Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo Equity Allocation and Scharf Fund Retail, you can compare the effects of market volatilities on Gmo Equity and Scharf 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 Gmo Equity with a short position of Scharf Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Equity and Scharf Fund.
Diversification Opportunities for Gmo Equity and Scharf Fund
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gmo and Scharf is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Equity Allocation and Scharf Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scharf Fund Retail and Gmo 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 Gmo Equity Allocation are associated (or correlated) with Scharf Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scharf Fund Retail has no effect on the direction of Gmo Equity i.e., Gmo Equity and Scharf Fund go up and down completely randomly.
Pair Corralation between Gmo Equity and Scharf Fund
Assuming the 90 days horizon Gmo Equity Allocation is expected to generate 1.45 times more return on investment than Scharf Fund. However, Gmo Equity is 1.45 times more volatile than Scharf Fund Retail. It trades about 0.03 of its potential returns per unit of risk. Scharf Fund Retail is currently generating about 0.05 per unit of risk. If you would invest 1,245 in Gmo Equity Allocation on September 12, 2024 and sell it today you would earn a total of 135.00 from holding Gmo Equity Allocation or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo Equity Allocation vs. Scharf Fund Retail
Performance |
| Timeline |
| Gmo Equity Allocation |
| Scharf Fund Retail |
Gmo Equity and Scharf Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo Equity and Scharf Fund
The main advantage of trading using opposite Gmo Equity and Scharf Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Equity position performs unexpectedly, Scharf 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 Scharf Fund will offset losses from the drop in Scharf Fund's long position.| Gmo Equity vs. Scharf Fund Retail | Gmo Equity vs. Locorr Dynamic Equity | Gmo Equity vs. Us Vector Equity | Gmo Equity vs. Multimedia Portfolio Multimedia |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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