Correlation Between Vanguard Capital and Scharf Fund

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

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

Diversification Opportunities for Vanguard Capital and Scharf Fund

0.89

Correlation Coefficient

Vanguard Capital  Scharf Fund

Very poor diversification

The 3 months correlation between VANGUARD and Scharf is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Capital Opportunity and Scharf Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scharf Fund Institutional and Vanguard Capital 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 Vanguard Capital Opportunity are associated (or correlated) with Scharf Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scharf Fund Institutional has no effect on the direction of Vanguard Capital i.e., Vanguard Capital and Scharf Fund go up and down completely randomly.

Pair Corralation between Vanguard Capital and Scharf Fund

Assuming the 90 days horizon Vanguard Capital Opportunity is expected to generate 1.84 times more return on investment than Scharf Fund. However, Vanguard Capital is 1.84 times more volatile than Scharf Fund Institutional. It trades about 0.4 of its potential returns per unit of risk. Scharf Fund Institutional is currently generating about 0.25 per unit of risk. If you would invest  7,339  in Vanguard Capital Opportunity on February 16, 2025 and sell it today you would earn a total of  942.00  from holding Vanguard Capital Opportunity or generate 12.84% return on investment over 90 days.

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

Vanguard Capital Opportunity  vs.  Scharf Fund Institutional

Vanguard Capital Opp

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Vanguard Capital and Scharf Fund

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

The idea behind Vanguard Capital Opportunity and Scharf Fund Institutional 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.