Correlation Between Scharf Fund and Goldman Sachs

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

Diversification Opportunities for Scharf Fund and Goldman Sachs

0.44

Correlation Coefficient

Scharf Fund  Goldman Sachs

Very weak diversification

The 3 months correlation between Scharf and Goldman is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Retail and Goldman Sachs Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Clean 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Clean has no effect on the direction of Scharf Fund i.e., Scharf Fund and Goldman Sachs go up and down completely randomly.

Pair Corralation between Scharf Fund and Goldman Sachs

Assuming the 90 days horizon Scharf Fund Retail is expected to under-perform the Goldman Sachs. In addition to that, Scharf Fund is 1.35 times more volatile than Goldman Sachs Clean. It trades about -0.34 of its total potential returns per unit of risk. Goldman Sachs Clean is currently generating about -0.23 per unit of volatility. If you would invest  864.00  in Goldman Sachs Clean on October 8, 2024 and sell it today you would lose (35.00) from holding Goldman Sachs Clean or give up 4.05% of portfolio value over 90 days.

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

Scharf Fund Retail  vs.  Goldman Sachs Clean

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.

Goldman Sachs Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Clean has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Scharf Fund and Goldman Sachs

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

The idea behind Scharf Fund Retail and Goldman Sachs Clean 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.