Correlation Between Sarofim Equity and Scharf Global

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

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

Diversification Opportunities for Sarofim Equity and Scharf Global

0.84

Correlation Coefficient

Sarofim Equity  Scharf Global

Very poor diversification

The 3 months correlation between Sarofim and Scharf is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sarofim Equity 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 Sarofim Equity 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 Sarofim Equity 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 Sarofim Equity i.e., Sarofim Equity and Scharf Global go up and down completely randomly.

Pair Corralation between Sarofim Equity and Scharf Global

Assuming the 90 days horizon Sarofim Equity is expected to generate 1.16 times more return on investment than Scharf Global. However, Sarofim Equity is 1.16 times more volatile than Scharf Global Opportunity. It trades about 0.12 of its potential returns per unit of risk. Scharf Global Opportunity is currently generating about 0.13 per unit of risk. If you would invest  1,638  in Sarofim Equity on September 5, 2024 and sell it today you would earn a total of  87.00  from holding Sarofim Equity or generate 5.31% return on investment over 90 days.

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

Sarofim Equity  vs.  Scharf Global Opportunity

Sarofim Equity

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sarofim Equity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Sarofim Equity 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

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scharf Global Opportunity are ranked lower than 10 (%) 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 Sarofim Equity and Scharf Global

The main advantage of trading using opposite Sarofim Equity and Scharf Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarofim Equity 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 Sarofim Equity 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.