Correlation Between Scharf Fund and Small Cap
Can any of the company-specific risk be diversified away by investing in both Scharf Fund and Small Cap 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 Small Cap 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 Small Cap Equity, you can compare the effects of market volatilities on Scharf Fund and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Fund and Small Cap.
Diversification Opportunities for Scharf Fund and Small Cap
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scharf and Small is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Retail and Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Equity 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Equity has no effect on the direction of Scharf Fund i.e., Scharf Fund and Small Cap go up and down completely randomly.
Pair Corralation between Scharf Fund and Small Cap
Assuming the 90 days horizon Scharf Fund is expected to generate 1.5 times less return on investment than Small Cap. But when comparing it to its historical volatility, Scharf Fund Retail is 1.66 times less risky than Small Cap. It trades about 0.06 of its potential returns per unit of risk. Small Cap Equity is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,564 in Small Cap Equity on August 24, 2024 and sell it today you would earn a total of 418.00 from holding Small Cap Equity or generate 26.73% 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. Small Cap Equity
Performance |
| Timeline |
| Scharf Fund Retail |
| Small Cap Equity |
Scharf Fund and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scharf Fund and Small Cap
The main advantage of trading using opposite Scharf Fund and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Fund position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Scharf Fund vs. Qs International Equity | Scharf Fund vs. Gmo Global Equity | Scharf Fund vs. The Hartford Equity | Scharf Fund vs. The Hartford Equity |
| Small Cap vs. Vanguard Small Cap Index | Small Cap vs. Vanguard Small Cap Index | Small Cap vs. Vanguard Small Cap Index | Small Cap vs. Fidelity Small Cap |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |