Correlation Between Optimum International and Scharf Global
Can any of the company-specific risk be diversified away by investing in both Optimum International and Scharf Global 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 Optimum International and Scharf Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optimum International Fund and Scharf Global Opportunity, you can compare the effects of market volatilities on Optimum International and Scharf Global 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 Optimum International with a short position of Scharf Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optimum International and Scharf Global.
Diversification Opportunities for Optimum International and Scharf Global
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Optimum and Scharf is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Optimum International Fund and Scharf Global Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scharf Global Opportunity and Optimum International 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 Optimum International Fund are associated (or correlated) with Scharf Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scharf Global Opportunity has no effect on the direction of Optimum International i.e., Optimum International and Scharf Global go up and down completely randomly.
Pair Corralation between Optimum International and Scharf Global
Assuming the 90 days horizon Optimum International is expected to generate 5.55 times less return on investment than Scharf Global. In addition to that, Optimum International is 1.2 times more volatile than Scharf Global Opportunity. It trades about 0.07 of its total potential returns per unit of risk. Scharf Global Opportunity is currently generating about 0.47 per unit of volatility. If you would invest 3,620 in Scharf Global Opportunity on September 1, 2024 and sell it today you would earn a total of 209.00 from holding Scharf Global Opportunity or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Optimum International Fund vs. Scharf Global Opportunity
Performance |
| Timeline |
| Optimum International |
| Scharf Global Opportunity |
Optimum International and Scharf Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optimum International and Scharf Global
The main advantage of trading using opposite Optimum International and Scharf Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimum International position performs unexpectedly, Scharf Global 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 Scharf Global will offset losses from the drop in Scharf Global's long position.The idea behind Optimum International Fund and Scharf Global Opportunity 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.
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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