Correlation Between Scharf Global and American Funds
Can any of the company-specific risk be diversified away by investing in both Scharf Global and American Funds 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 American Funds 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 American Funds Growth, you can compare the effects of market volatilities on Scharf Global and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Global and American Funds.
Diversification Opportunities for Scharf Global and American Funds
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scharf and American is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Global Opportunity and American Funds Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Growth 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Growth has no effect on the direction of Scharf Global i.e., Scharf Global and American Funds go up and down completely randomly.
Pair Corralation between Scharf Global and American Funds
Assuming the 90 days horizon Scharf Global Opportunity is expected to under-perform the American Funds. But the mutual fund apears to be less risky and, when comparing its historical volatility, Scharf Global Opportunity is 1.4 times less risky than American Funds. The mutual fund trades about 0.0 of its potential returns per unit of risk. The American Funds Growth is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,774 in American Funds Growth on September 13, 2024 and sell it today you would earn a total of 60.00 from holding American Funds Growth or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Scharf Global Opportunity vs. American Funds Growth
Performance |
| Timeline |
| Scharf Global Opportunity |
| American Funds Growth |
Scharf Global and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scharf Global and American Funds
The main advantage of trading using opposite Scharf Global and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Global position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 |
| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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