Correlation Between Scharf Fund and Federated Equity
Can any of the company-specific risk be diversified away by investing in both Scharf Fund and Federated Equity 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 Federated Equity 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 Federated Equity Income, you can compare the effects of market volatilities on Scharf Fund and Federated Equity 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 Federated Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Fund and Federated Equity.
Diversification Opportunities for Scharf Fund and Federated Equity
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scharf and FEDERATED is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Retail and Federated Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Equity Income 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 Federated Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Equity Income has no effect on the direction of Scharf Fund i.e., Scharf Fund and Federated Equity go up and down completely randomly.
Pair Corralation between Scharf Fund and Federated Equity
Assuming the 90 days horizon Scharf Fund is expected to generate 2.27 times less return on investment than Federated Equity. In addition to that, Scharf Fund is 1.11 times more volatile than Federated Equity Income. It trades about 0.06 of its total potential returns per unit of risk. Federated Equity Income is currently generating about 0.14 per unit of volatility. If you would invest 2,093 in Federated Equity Income on August 25, 2024 and sell it today you would earn a total of 556.00 from holding Federated Equity Income or generate 26.56% 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. Federated Equity Income
Performance |
| Timeline |
| Scharf Fund Retail |
| Federated Equity Income |
Scharf Fund and Federated Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scharf Fund and Federated Equity
The main advantage of trading using opposite Scharf Fund and Federated Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Fund position performs unexpectedly, Federated Equity 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 Federated Equity will offset losses from the drop in Federated Equity's long position.| Scharf Fund vs. Lord Abbett Government | Scharf Fund vs. Inverse Government Long | Scharf Fund vs. Us Government Securities | Scharf Fund vs. Short Term Government Fund |
| Federated Equity vs. Federated Emerging Market | Federated Equity vs. Federated Mdt All | Federated Equity vs. Federated Global Allocation | Federated Equity vs. Federated Hermes Emerging |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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