Correlation Between Scharf Global and Multifactor Equity
Can any of the company-specific risk be diversified away by investing in both Scharf Global and Multifactor Equity 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 Multifactor Equity 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 Multifactor Equity Fund, you can compare the effects of market volatilities on Scharf Global and Multifactor Equity 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 Multifactor Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Global and Multifactor Equity.
Diversification Opportunities for Scharf Global and Multifactor Equity
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scharf and Multifactor is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Global Opportunity and Multifactor Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multifactor 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 Multifactor Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multifactor Equity has no effect on the direction of Scharf Global i.e., Scharf Global and Multifactor Equity go up and down completely randomly.
Pair Corralation between Scharf Global and Multifactor Equity
Assuming the 90 days horizon Scharf Global is expected to generate 1.26 times less return on investment than Multifactor Equity. But when comparing it to its historical volatility, Scharf Global Opportunity is 1.38 times less risky than Multifactor Equity. It trades about 0.43 of its potential returns per unit of risk. Multifactor Equity Fund is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 1,953 in Multifactor Equity Fund on September 3, 2024 and sell it today you would earn a total of 127.00 from holding Multifactor Equity Fund or generate 6.5% 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. Multifactor Equity Fund
Performance |
| Timeline |
| Scharf Global Opportunity |
| Multifactor Equity |
Scharf Global and Multifactor Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scharf Global and Multifactor Equity
The main advantage of trading using opposite Scharf Global and Multifactor Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Global position performs unexpectedly, Multifactor Equity 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 Multifactor Equity will offset losses from the drop in Multifactor Equity's long position.| Scharf Global vs. Prudential Jennison Financial | Scharf Global vs. 1919 Financial Services | Scharf Global vs. Mesirow Financial Small | Scharf Global vs. Gabelli Global Financial |
| Multifactor Equity vs. Royce Opportunity Fund | Multifactor Equity vs. Heartland Value Plus | Multifactor Equity vs. Ultramid Cap Profund Ultramid Cap | Multifactor Equity vs. Lord Abbett Small |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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