Correlation Between Midcap Fund and Scharf Global
Can any of the company-specific risk be diversified away by investing in both Midcap Fund 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 Midcap Fund and Scharf Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midcap Fund R 3 and Scharf Global Opportunity, you can compare the effects of market volatilities on Midcap Fund 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 Midcap Fund with a short position of Scharf Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midcap Fund and Scharf Global.
Diversification Opportunities for Midcap Fund and Scharf Global
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Midcap and Scharf is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Midcap Fund R 3 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 Midcap 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 Midcap Fund R 3 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 Midcap Fund i.e., Midcap Fund and Scharf Global go up and down completely randomly.
Pair Corralation between Midcap Fund and Scharf Global
Assuming the 90 days horizon Midcap Fund R 3 is expected to generate 1.59 times more return on investment than Scharf Global. However, Midcap Fund is 1.59 times more volatile than Scharf Global Opportunity. It trades about 0.37 of its potential returns per unit of risk. Scharf Global Opportunity is currently generating about 0.33 per unit of risk. If you would invest 4,203 in Midcap Fund R 3 on September 4, 2024 and sell it today you would earn a total of 322.00 from holding Midcap Fund R 3 or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Midcap Fund R 3 vs. Scharf Global Opportunity
Performance |
| Timeline |
| Midcap Fund R |
| Scharf Global Opportunity |
Midcap Fund and Scharf Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midcap Fund and Scharf Global
The main advantage of trading using opposite Midcap Fund and Scharf Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midcap Fund 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.| Midcap Fund vs. Scharf Global Opportunity | Midcap Fund vs. Legg Mason Global | Midcap Fund vs. Morningstar Global Income | Midcap Fund vs. Ab Global Bond |
| Scharf Global vs. The Hartford Emerging | Scharf Global vs. Locorr Market Trend | Scharf Global vs. Ep Emerging Markets | Scharf Global vs. Morgan Stanley Emerging |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |