Correlation Between Scharf Global and Oakmark International

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

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

Diversification Opportunities for Scharf Global and Oakmark International

0.09

Correlation Coefficient

Scharf Global  Oakmark International

Significant diversification

The 3 months correlation between Scharf and Oakmark is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Global Opportunity and Oakmark International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark International and Scharf Global 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 Global Opportunity are associated (or correlated) with Oakmark International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark International has no effect on the direction of Scharf Global i.e., Scharf Global and Oakmark International go up and down completely randomly.

Pair Corralation between Scharf Global and Oakmark International

Assuming the 90 days horizon Scharf Global Opportunity is expected to generate 0.71 times more return on investment than Oakmark International. However, Scharf Global Opportunity is 1.41 times less risky than Oakmark International. It trades about 0.05 of its potential returns per unit of risk. Oakmark International Small is currently generating about 0.02 per unit of risk. If you would invest  2,962  in Scharf Global Opportunity on September 20, 2024 and sell it today you would earn a total of  521.00  from holding Scharf Global Opportunity or generate 17.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Scharf Global Opportunity  vs.  Oakmark International Small

Scharf Global Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scharf Global Opportunity has generated negative risk-adjusted returns adding no value to fund investors. 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.

Oakmark International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oakmark International Small 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 January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Scharf Global and Oakmark International

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

The idea behind Scharf Global Opportunity and Oakmark International Small 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.