Correlation Between Scharf Global and Embark Small
Can any of the company-specific risk be diversified away by investing in both Scharf Global and Embark Small 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 Embark Small 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 Embark Small Cap, you can compare the effects of market volatilities on Scharf Global and Embark Small 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 Embark Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Global and Embark Small.
Diversification Opportunities for Scharf Global and Embark Small
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Scharf and Embark is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Global Opportunity and Embark Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embark Small Cap 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 Embark Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embark Small Cap has no effect on the direction of Scharf Global i.e., Scharf Global and Embark Small go up and down completely randomly.
Pair Corralation between Scharf Global and Embark Small
Assuming the 90 days horizon Scharf Global is expected to generate 1.38 times less return on investment than Embark Small. But when comparing it to its historical volatility, Scharf Global Opportunity is 1.76 times less risky than Embark Small. It trades about 0.11 of its potential returns per unit of risk. Embark Small Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 977.00 in Embark Small Cap on September 4, 2024 and sell it today you would earn a total of 206.00 from holding Embark Small Cap or generate 21.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 72.41% |
| Values | Daily Returns |
Scharf Global Opportunity vs. Embark Small Cap
Performance |
| Timeline |
| Scharf Global Opportunity |
| Embark Small Cap |
Scharf Global and Embark Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scharf Global and Embark Small
The main advantage of trading using opposite Scharf Global and Embark Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Global position performs unexpectedly, Embark Small 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 Embark Small will offset losses from the drop in Embark Small's long position.| Scharf Global vs. The Hartford Emerging | Scharf Global vs. Locorr Market Trend | Scharf Global vs. Ep Emerging Markets | Scharf Global vs. Morgan Stanley Emerging |
| Embark Small vs. Pace Large Growth | Embark Small vs. Tfa Alphagen Growth | Embark Small vs. Qs Moderate Growth | Embark Small vs. Franklin Growth Opportunities |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |