Correlation Between Capital World and Scharf Global
Can any of the company-specific risk be diversified away by investing in both Capital World 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 Capital World and Scharf Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Growth and Scharf Global Opportunity, you can compare the effects of market volatilities on Capital World 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 Capital World with a short position of Scharf Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Scharf Global.
Diversification Opportunities for Capital World and Scharf Global
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Scharf is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth 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 Capital World 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 Capital World Growth 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 Capital World i.e., Capital World and Scharf Global go up and down completely randomly.
Pair Corralation between Capital World and Scharf Global
Assuming the 90 days horizon Capital World Growth is expected to generate 1.11 times more return on investment than Scharf Global. However, Capital World is 1.11 times more volatile than Scharf Global Opportunity. It trades about 0.09 of its potential returns per unit of risk. Scharf Global Opportunity is currently generating about 0.07 per unit of risk. If you would invest 5,009 in Capital World Growth on August 26, 2024 and sell it today you would earn a total of 1,789 from holding Capital World Growth or generate 35.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Growth vs. Scharf Global Opportunity
Performance |
| Timeline |
| Capital World Growth |
| Scharf Global Opportunity |
Capital World and Scharf Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Scharf Global
The main advantage of trading using opposite Capital World and Scharf Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World 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.| Capital World vs. Scharf Global Opportunity | Capital World vs. Ab Value Fund | Capital World vs. Balanced Fund Investor | Capital World vs. Rbb Fund |
| Scharf Global vs. Blackrock Sm Cap | Scharf Global vs. Balanced Fund Investor | Scharf Global vs. Small Cap Stock | Scharf Global vs. Rational Special Situations |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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