Correlation Between Western Assets and Scharf Fund
Can any of the company-specific risk be diversified away by investing in both Western Assets and Scharf Fund 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 Western Assets and Scharf Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Assets Emerging and Scharf Fund Retail, you can compare the effects of market volatilities on Western Assets and Scharf Fund 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 Western Assets with a short position of Scharf Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Scharf Fund.
Diversification Opportunities for Western Assets and Scharf Fund
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Scharf is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Scharf Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scharf Fund Retail and Western Assets 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 Western Assets Emerging are associated (or correlated) with Scharf Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scharf Fund Retail has no effect on the direction of Western Assets i.e., Western Assets and Scharf Fund go up and down completely randomly.
Pair Corralation between Western Assets and Scharf Fund
Assuming the 90 days horizon Western Assets Emerging is expected to generate 1.19 times more return on investment than Scharf Fund. However, Western Assets is 1.19 times more volatile than Scharf Fund Retail. It trades about 0.23 of its potential returns per unit of risk. Scharf Fund Retail is currently generating about -0.24 per unit of risk. If you would invest 1,059 in Western Assets Emerging on October 25, 2024 and sell it today you would earn a total of 13.00 from holding Western Assets Emerging or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Assets Emerging vs. Scharf Fund Retail
Performance |
| Timeline |
| Western Assets Emerging |
| Scharf Fund Retail |
Western Assets and Scharf Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Scharf Fund
The main advantage of trading using opposite Western Assets and Scharf Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Scharf Fund 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 Scharf Fund will offset losses from the drop in Scharf Fund's long position.| Western Assets vs. Tax Managed Mid Small | Western Assets vs. Ab Small Cap | Western Assets vs. Smallcap Fund Fka | Western Assets vs. Kinetics Small Cap |
| Scharf Fund vs. Western Assets Emerging | Scharf Fund vs. Balanced Strategy Fund | Scharf Fund vs. Siit Emerging Markets | Scharf Fund vs. Dws Emerging Markets |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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