Correlation Between Scharf Fund and Grandeur Peak

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

Diversification Opportunities for Scharf Fund and Grandeur Peak

-0.36

Correlation Coefficient

Scharf Fund  Grandeur Peak

Very good diversification

The 3 months correlation between Scharf and Grandeur is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Retail and Grandeur Peak Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grandeur Peak Global 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 Grandeur Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grandeur Peak Global has no effect on the direction of Scharf Fund i.e., Scharf Fund and Grandeur Peak go up and down completely randomly.

Pair Corralation between Scharf Fund and Grandeur Peak

Assuming the 90 days horizon Scharf Fund Retail is expected to generate 0.71 times more return on investment than Grandeur Peak. However, Scharf Fund Retail is 1.41 times less risky than Grandeur Peak. It trades about 0.02 of its potential returns per unit of risk. Grandeur Peak Global is currently generating about -0.07 per unit of risk. If you would invest  5,504  in Scharf Fund Retail on September 15, 2024 and sell it today you would earn a total of  30.00  from holding Scharf Fund Retail or generate 0.55% return on investment over 90 days.

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

Scharf Fund Retail  vs.  Grandeur Peak Global

Scharf Fund Retail

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scharf Fund Retail are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Scharf Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Grandeur Peak Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grandeur Peak Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Grandeur Peak 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 Grandeur Peak

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

The idea behind Scharf Fund Retail and Grandeur Peak Global 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.