Correlation Between Scharf Fund and Fidelity Freedom
Can any of the company-specific risk be diversified away by investing in both Scharf Fund and Fidelity Freedom 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 Fidelity Freedom 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 Fidelity Freedom 2050, you can compare the effects of market volatilities on Scharf Fund and Fidelity Freedom 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 Fidelity Freedom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Fund and Fidelity Freedom.
Diversification Opportunities for Scharf Fund and Fidelity Freedom
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Scharf and Fidelity is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Retail and Fidelity Freedom 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Freedom 2050 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 Fidelity Freedom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Freedom 2050 has no effect on the direction of Scharf Fund i.e., Scharf Fund and Fidelity Freedom go up and down completely randomly.
Pair Corralation between Scharf Fund and Fidelity Freedom
Assuming the 90 days horizon Scharf Fund is expected to generate 1.75 times less return on investment than Fidelity Freedom. But when comparing it to its historical volatility, Scharf Fund Retail is 1.02 times less risky than Fidelity Freedom. It trades about 0.06 of its potential returns per unit of risk. Fidelity Freedom 2050 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,027 in Fidelity Freedom 2050 on September 12, 2024 and sell it today you would earn a total of 414.00 from holding Fidelity Freedom 2050 or generate 40.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scharf Fund Retail vs. Fidelity Freedom 2050
Performance |
| Timeline |
| Scharf Fund Retail |
| Fidelity Freedom 2050 |
Scharf Fund and Fidelity Freedom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scharf Fund and Fidelity Freedom
The main advantage of trading using opposite Scharf Fund and Fidelity Freedom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Fund position performs unexpectedly, Fidelity Freedom 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 Fidelity Freedom will offset losses from the drop in Fidelity Freedom's long position.| Scharf Fund vs. Gmo Resources | Scharf Fund vs. Icon Natural Resources | Scharf Fund vs. Fidelity Advisor Energy | Scharf Fund vs. Oil Gas Ultrasector |
| Fidelity Freedom vs. Gmo Global Equity | Fidelity Freedom vs. Ab Select Equity | Fidelity Freedom vs. Huber Capital Equity | Fidelity Freedom vs. Scharf Fund Retail |
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.
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