Correlation Between Scharf Global and Small Cap
Can any of the company-specific risk be diversified away by investing in both Scharf Global and Small Cap 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 Small Cap 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 Small Cap Equity, you can compare the effects of market volatilities on Scharf Global and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Global and Small Cap.
Diversification Opportunities for Scharf Global and Small Cap
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scharf and Small is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Global Opportunity and Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Equity 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Equity has no effect on the direction of Scharf Global i.e., Scharf Global and Small Cap go up and down completely randomly.
Pair Corralation between Scharf Global and Small Cap
Assuming the 90 days horizon Scharf Global is expected to generate 2.34 times less return on investment than Small Cap. But when comparing it to its historical volatility, Scharf Global Opportunity is 2.68 times less risky than Small Cap. It trades about 0.32 of its potential returns per unit of risk. Small Cap Equity is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,852 in Small Cap Equity on September 5, 2024 and sell it today you would earn a total of 183.00 from holding Small Cap Equity or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scharf Global Opportunity vs. Small Cap Equity
Performance |
| Timeline |
| Scharf Global Opportunity |
| Small Cap Equity |
Scharf Global and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scharf Global and Small Cap
The main advantage of trading using opposite Scharf Global and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Global position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Scharf Global vs. Small Cap Equity | Scharf Global vs. Sarofim Equity | Scharf Global vs. Us Vector Equity | Scharf Global vs. Scharf Fund Retail |
| Small Cap vs. Lind Capital Partners | Small Cap vs. Cs 607 Tax | Small Cap vs. Pace Municipal Fixed | Small Cap vs. Federated Pennsylvania Municipal |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |