Correlation Between Scharf Fund and Alger Health
Can any of the company-specific risk be diversified away by investing in both Scharf Fund and Alger Health 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 Scharf Fund and Alger Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scharf Fund Retail and Alger Health Sciences, you can compare the effects of market volatilities on Scharf Fund and Alger Health 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 Scharf Fund with a short position of Alger Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Fund and Alger Health.
Diversification Opportunities for Scharf Fund and Alger Health
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scharf and Alger is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Retail and Alger Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Health Sciences and Scharf Fund 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 Scharf Fund Retail are associated (or correlated) with Alger Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Health Sciences has no effect on the direction of Scharf Fund i.e., Scharf Fund and Alger Health go up and down completely randomly.
Pair Corralation between Scharf Fund and Alger Health
Assuming the 90 days horizon Scharf Fund Retail is expected to under-perform the Alger Health. But the mutual fund apears to be less risky and, when comparing its historical volatility, Scharf Fund Retail is 2.39 times less risky than Alger Health. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Alger Health Sciences is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,283 in Alger Health Sciences on October 24, 2024 and sell it today you would earn a total of 9.00 from holding Alger Health Sciences or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scharf Fund Retail vs. Alger Health Sciences
Performance |
| Timeline |
| Scharf Fund Retail |
| Alger Health Sciences |
Scharf Fund and Alger Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scharf Fund and Alger Health
The main advantage of trading using opposite Scharf Fund and Alger Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Fund position performs unexpectedly, Alger Health 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 Alger Health will offset losses from the drop in Alger Health's long position.| Scharf Fund vs. Kinetics Small Cap | Scharf Fund vs. Vy Columbia Small | Scharf Fund vs. Franklin Small Cap | Scharf Fund vs. Ab Small Cap |
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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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