Correlation Between Scharf Fund and The Gabelli

Can any of the company-specific risk be diversified away by investing in both Scharf Fund and The Gabelli 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 The Gabelli 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 The Gabelli Equity, you can compare the effects of market volatilities on Scharf Fund and The Gabelli 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 The Gabelli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Fund and The Gabelli.

Diversification Opportunities for Scharf Fund and The Gabelli

0.41

Correlation Coefficient

Scharf Fund  The Gabelli

Very weak diversification

The 3 months correlation between Scharf and The is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Retail and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity 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 The Gabelli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of Scharf Fund i.e., Scharf Fund and The Gabelli go up and down completely randomly.

Pair Corralation between Scharf Fund and The Gabelli

Assuming the 90 days horizon Scharf Fund is expected to generate 1.57 times less return on investment than The Gabelli. But when comparing it to its historical volatility, Scharf Fund Retail is 1.1 times less risky than The Gabelli. It trades about 0.04 of its potential returns per unit of risk. The Gabelli Equity is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  493.00  in The Gabelli Equity on December 2, 2024 and sell it today you would earn a total of  115.00  from holding The Gabelli Equity or generate 23.33% return on investment over 90 days.

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

Scharf Fund Retail  vs.  The Gabelli Equity

Scharf Fund Retail

Risk-Adjusted Performance

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.

Gabelli Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, The Gabelli 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 The Gabelli

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

The idea behind Scharf Fund Retail and The Gabelli Equity 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.