Correlation Between Scharf Fund and Dodge International

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

Diversification Opportunities for Scharf Fund and Dodge International

-0.49

Correlation Coefficient

Scharf Fund  Dodge International

Very good diversification

The 3 months correlation between Scharf and Dodge is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Retail and Dodge International Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge International Stock 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 Dodge International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge International Stock has no effect on the direction of Scharf Fund i.e., Scharf Fund and Dodge International go up and down completely randomly.

Pair Corralation between Scharf Fund and Dodge International

Assuming the 90 days horizon Scharf Fund Retail is expected to generate 0.72 times more return on investment than Dodge International. However, Scharf Fund Retail is 1.38 times less risky than Dodge International. It trades about 0.03 of its potential returns per unit of risk. Dodge International Stock is currently generating about -0.01 per unit of risk. If you would invest  5,504  in Scharf Fund Retail on September 14, 2024 and sell it today you would earn a total of  48.00  from holding Scharf Fund Retail or generate 0.87% return on investment over 90 days.

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

Scharf Fund Retail  vs.  Dodge International Stock

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.

Dodge International Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dodge International Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dodge International 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 Dodge International

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

The idea behind Scharf Fund Retail and Dodge International Stock 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.