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 Income, 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
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Scharf and American is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Global Opportunity and American Funds Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Income 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 Income 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 generate 2.07 times more return on investment than American Funds. However, Scharf Global is 2.07 times more volatile than American Funds Income. It trades about 0.22 of its potential returns per unit of risk. American Funds Income is currently generating about 0.02 per unit of risk. If you would invest 3,688 in Scharf Global Opportunity on August 27, 2024 and sell it today you would earn a total of 118.00 from holding Scharf Global Opportunity or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scharf Global Opportunity vs. American Funds Income
Performance |
| Timeline |
| Scharf Global Opportunity |
| American Funds Income |
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. Materials Portfolio Fidelity | Scharf Global vs. Rational Special Situations | Scharf Global vs. Multimedia Portfolio Multimedia | Scharf Global vs. Morgan Stanley Institutional |
| American Funds vs. Omni Small Cap Value | American Funds vs. Auer Growth Fund | American Funds vs. Balanced Fund Investor | American Funds vs. Blackrock Sm Cap |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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