Correlation Between Vanguard Total and Scharf Fund

Can any of the company-specific risk be diversified away by investing in both Vanguard Total 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 Total 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 Total Stock and Scharf Fund Retail, you can compare the effects of market volatilities on Vanguard Total 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 Total with a short position of Scharf Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Scharf Fund.

Diversification Opportunities for Vanguard Total and Scharf Fund

0.71

Correlation Coefficient

Vanguard Total  Scharf Fund

Poor diversification

The 3 months correlation between Vanguard and Scharf is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Scharf Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scharf Fund Retail and Vanguard Total 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 Total Stock 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 Retail has no effect on the direction of Vanguard Total i.e., Vanguard Total and Scharf Fund go up and down completely randomly.

Pair Corralation between Vanguard Total and Scharf Fund

Considering the 90-day investment horizon Vanguard Total Stock is expected to generate 1.2 times more return on investment than Scharf Fund. However, Vanguard Total is 1.2 times more volatile than Scharf Fund Retail. It trades about 0.08 of its potential returns per unit of risk. Scharf Fund Retail is currently generating about -0.02 per unit of risk. If you would invest  25,531  in Vanguard Total Stock on March 13, 2024 and sell it today you would earn a total of  897.00  from holding Vanguard Total Stock or generate 3.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Vanguard Total Stock  vs.  Scharf Fund Retail

Vanguard Total Stock

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Scharf Fund Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scharf Fund Retail has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Total and Scharf Fund

The main advantage of trading using opposite Vanguard Total and Scharf Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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 Total Stock and Scharf Fund Retail 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.