Correlation Between Scharf Fund and Issachar Fund

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

Diversification Opportunities for Scharf Fund and Issachar Fund

0.32

Correlation Coefficient

Scharf Fund  Issachar Fund

Weak diversification

The 3 months correlation between Scharf and Issachar is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Institutional and Issachar Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Issachar Fund Class 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 Issachar Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Issachar Fund Class has no effect on the direction of Scharf Fund i.e., Scharf Fund and Issachar Fund go up and down completely randomly.

Pair Corralation between Scharf Fund and Issachar Fund

Assuming the 90 days horizon Scharf Fund Institutional is expected to under-perform the Issachar Fund. In addition to that, Scharf Fund is 1.81 times more volatile than Issachar Fund Class. It trades about -0.06 of its total potential returns per unit of risk. Issachar Fund Class is currently generating about -0.05 per unit of volatility. If you would invest  954.00  in Issachar Fund Class on January 27, 2025 and sell it today you would lose (24.00) from holding Issachar Fund Class or give up 2.52% of portfolio value over 90 days.

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

Scharf Fund Institutional  vs.  Issachar Fund Class

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.

Issachar Fund Class

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Scharf Fund Institutional and Issachar Fund Class 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.