Correlation Between Scharf Fund and Guggenheim Market

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

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

Diversification Opportunities for Scharf Fund and Guggenheim Market

0.48

Correlation Coefficient

Scharf Fund  Guggenheim Market

Very weak diversification

The 3 months correlation between Scharf and Guggenheim is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Retail and Guggenheim Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Market Neutral 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 Retail are associated (or correlated) with Guggenheim Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Market Neutral has no effect on the direction of Scharf Fund i.e., Scharf Fund and Guggenheim Market go up and down completely randomly.

Pair Corralation between Scharf Fund and Guggenheim Market

Assuming the 90 days horizon Scharf Fund Retail is expected to under-perform the Guggenheim Market. In addition to that, Scharf Fund is 2.57 times more volatile than Guggenheim Market Neutral. It trades about -0.12 of its total potential returns per unit of risk. Guggenheim Market Neutral is currently generating about -0.27 per unit of volatility. If you would invest  2,597  in Guggenheim Market Neutral on September 14, 2024 and sell it today you would lose (28.00) from holding Guggenheim Market Neutral or give up 1.08% of portfolio value over 90 days.

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

Scharf Fund Retail  vs.  Guggenheim Market Neutral

Scharf Fund Retail

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Scharf Fund Retail are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.

Guggenheim Market Neutral

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Market Neutral has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Guggenheim Market 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 Guggenheim Market

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

The idea behind Scharf Fund Retail and Guggenheim Market Neutral 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.