Correlation Between Scharf Global and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Scharf Global and Old Westbury 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 Old Westbury 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 Old Westbury Large, you can compare the effects of market volatilities on Scharf Global and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Global and Old Westbury.
Diversification Opportunities for Scharf Global and Old Westbury
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scharf and Old is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Global Opportunity and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Large has no effect on the direction of Scharf Global i.e., Scharf Global and Old Westbury go up and down completely randomly.
Pair Corralation between Scharf Global and Old Westbury
Assuming the 90 days horizon Scharf Global is expected to generate 1.42 times less return on investment than Old Westbury. In addition to that, Scharf Global is 1.02 times more volatile than Old Westbury Large. It trades about 0.2 of its total potential returns per unit of risk. Old Westbury Large is currently generating about 0.29 per unit of volatility. If you would invest 2,084 in Old Westbury Large on September 6, 2024 and sell it today you would earn a total of 79.00 from holding Old Westbury Large or generate 3.79% 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. Old Westbury Large
Performance |
| Timeline |
| Scharf Global Opportunity |
| Old Westbury Large |
Scharf Global and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scharf Global and Old Westbury
The main advantage of trading using opposite Scharf Global and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Global position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Scharf Global vs. Auer Growth Fund | Scharf Global vs. Transamerica Emerging Markets | Scharf Global vs. Nasdaq 100 Index Fund | Scharf Global vs. Issachar Fund Class |
| Old Westbury vs. American Funds New | Old Westbury vs. New Perspective Fund | Old Westbury vs. New Perspective Fund | Old Westbury vs. New Perspective Fund |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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