Correlation Between Scharf Global and Eafe Fund
Can any of the company-specific risk be diversified away by investing in both Scharf Global and Eafe Fund 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 Global and Eafe Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scharf Global Opportunity and The Eafe Fund, you can compare the effects of market volatilities on Scharf Global and Eafe Fund 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 Global with a short position of Eafe Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Global and Eafe Fund.
Diversification Opportunities for Scharf Global and Eafe Fund
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Scharf and Eafe is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Global Opportunity and The Eafe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eafe Fund and Scharf Global 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 Global Opportunity are associated (or correlated) with Eafe Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eafe Fund has no effect on the direction of Scharf Global i.e., Scharf Global and Eafe Fund go up and down completely randomly.
Pair Corralation between Scharf Global and Eafe Fund
Assuming the 90 days horizon Scharf Global is expected to generate 2.53 times less return on investment than Eafe Fund. But when comparing it to its historical volatility, Scharf Global Opportunity is 2.11 times less risky than Eafe Fund. It trades about 0.07 of its potential returns per unit of risk. The Eafe Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,327 in The Eafe Fund on September 12, 2024 and sell it today you would earn a total of 85.00 from holding The Eafe Fund or generate 6.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scharf Global Opportunity vs. The Eafe Fund
Performance |
| Timeline |
| Scharf Global Opportunity |
| Eafe Fund |
Scharf Global and Eafe Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scharf Global and Eafe Fund
The main advantage of trading using opposite Scharf Global and Eafe Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Global position performs unexpectedly, Eafe Fund 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 Eafe Fund will offset losses from the drop in Eafe Fund's long position.| Scharf Global vs. Invesco Energy Fund | Scharf Global vs. Goehring Rozencwajg Resources | Scharf Global vs. Oil Gas Ultrasector | Scharf Global vs. Jennison Natural Resources |
| Eafe Fund vs. Federated Hermes Conservative | Eafe Fund vs. Stone Ridge Diversified | Eafe Fund vs. Fidelity Advisor Diversified | Eafe Fund vs. Fulcrum Diversified Absolute |
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 CEOs Directory module to screen CEOs from public companies around the world.
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