Correlation Between Scharf Fund and Ab E

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

By analyzing existing cross correlation between Scharf Fund Retail and Ab E Opportunities, you can compare the effects of market volatilities on Scharf Fund and Ab E 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 Fund with a short position of Ab E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Fund and Ab E.

Diversification Opportunities for Scharf Fund and Ab E

0.91

Correlation Coefficient

Scharf Fund  Ab E

Almost no diversification

The 3 months correlation between Scharf and ADGAX is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Retail and Ab E Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab E Opportunities and Scharf Fund 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 Fund Retail are associated (or correlated) with Ab E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab E Opportunities has no effect on the direction of Scharf Fund i.e., Scharf Fund and Ab E go up and down completely randomly.

Pair Corralation between Scharf Fund and Ab E

Assuming the 90 days horizon Scharf Fund is expected to generate 4.28 times less return on investment than Ab E. But when comparing it to its historical volatility, Scharf Fund Retail is 1.52 times less risky than Ab E. It trades about 0.02 of its potential returns per unit of risk. Ab E Opportunities is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,068  in Ab E Opportunities on October 9, 2024 and sell it today you would earn a total of  264.00  from holding Ab E Opportunities or generate 12.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Scharf Fund Retail  vs.  Ab E Opportunities

Scharf Fund Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scharf Fund Retail has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Ab E Opportunities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab E Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ab E is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Scharf Fund and Ab E

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

The idea behind Scharf Fund Retail and Ab E Opportunities 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 Stocks Directory module to find actively traded stocks across global markets.