Correlation Between Scharf Fund and Ab Sustainable

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

By analyzing existing cross correlation between Scharf Fund Institutional and Ab Sustainable International, you can compare the effects of market volatilities on Scharf Fund and Ab Sustainable 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 Ab Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Fund and Ab Sustainable.

Diversification Opportunities for Scharf Fund and Ab Sustainable

0.88

Correlation Coefficient

Scharf Fund  Ab Sustainable

Very poor diversification

The 3 months correlation between Scharf and AWPZX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Institutional and Ab Sustainable International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Sustainable Inter 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 Institutional are associated (or correlated) with Ab Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Sustainable Inter has no effect on the direction of Scharf Fund i.e., Scharf Fund and Ab Sustainable go up and down completely randomly.

Pair Corralation between Scharf Fund and Ab Sustainable

Assuming the 90 days horizon Scharf Fund Institutional is expected to under-perform the Ab Sustainable. But the mutual fund apears to be less risky and, when comparing its historical volatility, Scharf Fund Institutional is 1.18 times less risky than Ab Sustainable. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Ab Sustainable International is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,991  in Ab Sustainable International on January 22, 2025 and sell it today you would lose (105.00) from holding Ab Sustainable International or give up 5.27% of portfolio value over 90 days.

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

Scharf Fund Institutional  vs.  Ab Sustainable International

Scharf Fund Institutional

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scharf Fund Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Scharf Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ab Sustainable Inter

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ab Sustainable International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ab Sustainable 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 Ab Sustainable

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

The idea behind Scharf Fund Institutional and Ab Sustainable International 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.