Correlation Between Scharf Fund and Aggressive Growth

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Scharf Fund and Aggressive Growth 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 Aggressive Growth 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 Aggressive Growth Allocation, you can compare the effects of market volatilities on Scharf Fund and Aggressive Growth 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 Aggressive Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Fund and Aggressive Growth.

Diversification Opportunities for Scharf Fund and Aggressive Growth

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Scharf and Aggressive is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Retail and Aggressive Growth Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Growth 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 Aggressive Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Growth has no effect on the direction of Scharf Fund i.e., Scharf Fund and Aggressive Growth go up and down completely randomly.

Pair Corralation between Scharf Fund and Aggressive Growth

Assuming the 90 days horizon Scharf Fund Retail is expected to under-perform the Aggressive Growth. In addition to that, Scharf Fund is 1.23 times more volatile than Aggressive Growth Allocation. It trades about -0.13 of its total potential returns per unit of risk. Aggressive Growth Allocation is currently generating about 0.12 per unit of volatility. If you would invest  1,168  in Aggressive Growth Allocation on September 12, 2024 and sell it today you would earn a total of  12.00  from holding Aggressive Growth Allocation or generate 1.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Scharf Fund Retail  vs.  Aggressive Growth Allocation

 Performance 
       Timeline  
Scharf Fund Retail 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Scharf Fund Retail are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Scharf Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Aggressive Growth 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Aggressive Growth Allocation are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Aggressive Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Scharf Fund and Aggressive Growth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Scharf Fund and Aggressive Growth

The main advantage of trading using opposite Scharf Fund and Aggressive Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Fund position performs unexpectedly, Aggressive Growth 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 Aggressive Growth will offset losses from the drop in Aggressive Growth's long position.
The idea behind Scharf Fund Retail and Aggressive Growth Allocation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

Other Complementary Tools

Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators