Correlation Between Multi Index and Scharf Global

Can any of the company-specific risk be diversified away by investing in both Multi Index and Scharf Global 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 Multi Index and Scharf Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Multi Index 2045 Lifetime and Scharf Global Opportunity, you can compare the effects of market volatilities on Multi Index and Scharf Global 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 Multi Index with a short position of Scharf Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Index and Scharf Global.

Diversification Opportunities for Multi Index and Scharf Global

0.87

Correlation Coefficient

Multi Index  Scharf Global

Very poor diversification

The 3 months correlation between Multi and Scharf is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Multi Index 2045 Lifetime and Scharf Global Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scharf Global Opportunity and Multi Index 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 Multi Index 2045 Lifetime are associated (or correlated) with Scharf Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scharf Global Opportunity has no effect on the direction of Multi Index i.e., Multi Index and Scharf Global go up and down completely randomly.

Pair Corralation between Multi Index and Scharf Global

Assuming the 90 days horizon Multi Index 2045 Lifetime is expected to generate 0.96 times more return on investment than Scharf Global. However, Multi Index 2045 Lifetime is 1.04 times less risky than Scharf Global. It trades about 0.12 of its potential returns per unit of risk. Scharf Global Opportunity is currently generating about 0.06 per unit of risk. If you would invest  1,428  in Multi Index 2045 Lifetime on September 13, 2024 and sell it today you would earn a total of  62.00  from holding Multi Index 2045 Lifetime or generate 4.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Multi Index 2045 Lifetime  vs.  Scharf Global Opportunity

Multi Index 2045

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Index 2045 Lifetime are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multi Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Scharf Global Opportunity

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Scharf Global Opportunity are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Scharf Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Multi Index and Scharf Global

The main advantage of trading using opposite Multi Index and Scharf Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Index position performs unexpectedly, Scharf Global 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 Global will offset losses from the drop in Scharf Global's long position.

The idea behind Multi Index 2045 Lifetime and Scharf Global Opportunity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..