Correlation Between Scharf Fund and Gmo Equity
Can any of the company-specific risk be diversified away by investing in both Scharf Fund and Gmo 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 Gmo 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 Gmo Equity Allocation, you can compare the effects of market volatilities on Scharf Fund and Gmo 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 Gmo Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Fund and Gmo Equity.
Diversification Opportunities for Scharf Fund and Gmo Equity
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scharf and Gmo is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Retail and Gmo Equity Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Equity Allocation 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 Gmo Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Equity Allocation has no effect on the direction of Scharf Fund i.e., Scharf Fund and Gmo Equity go up and down completely randomly.
Pair Corralation between Scharf Fund and Gmo Equity
Assuming the 90 days horizon Scharf Fund is expected to generate 1.03 times less return on investment than Gmo Equity. But when comparing it to its historical volatility, Scharf Fund Retail is 1.45 times less risky than Gmo Equity. It trades about 0.05 of its potential returns per unit of risk. Gmo Equity Allocation is currently generating about 0.03 of returns per unit of risk over similar time horizon. 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 |
Scharf Fund Retail vs. Gmo Equity Allocation
Performance |
| Timeline |
| Scharf Fund Retail |
| Gmo Equity Allocation |
Scharf Fund and Gmo Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scharf Fund and Gmo Equity
The main advantage of trading using opposite Scharf Fund and Gmo Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Fund position performs unexpectedly, Gmo 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 Gmo Equity will offset losses from the drop in Gmo Equity'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 |
| Gmo Equity vs. Scharf Fund Retail | Gmo Equity vs. Locorr Dynamic Equity | Gmo Equity vs. Us Vector Equity | Gmo Equity vs. Multimedia Portfolio Multimedia |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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