Correlation Between Scharf Fund and Thrivent Moderate

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

Diversification Opportunities for Scharf Fund and Thrivent Moderate

0.83

Correlation Coefficient

Scharf Fund  Thrivent Moderate

Very poor diversification

The 3 months correlation between Scharf and Thrivent is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Fund Retail and Thrivent Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Moderate 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 Thrivent Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Moderate has no effect on the direction of Scharf Fund i.e., Scharf Fund and Thrivent Moderate go up and down completely randomly.

Pair Corralation between Scharf Fund and Thrivent Moderate

Assuming the 90 days horizon Scharf Fund Retail is expected to generate 0.42 times more return on investment than Thrivent Moderate. However, Scharf Fund Retail is 2.38 times less risky than Thrivent Moderate. It trades about -0.11 of its potential returns per unit of risk. Thrivent Moderate Allocation is currently generating about -0.14 per unit of risk. If you would invest  5,600  in Scharf Fund Retail on September 15, 2024 and sell it today you would lose (66.00) from holding Scharf Fund Retail or give up 1.18% of portfolio value over 90 days.

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

Scharf Fund Retail  vs.  Thrivent Moderate Allocation

Scharf Fund Retail

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scharf Fund Retail are ranked lower than 1 (%) 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.

Thrivent Moderate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thrivent Moderate Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Thrivent Moderate 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 Thrivent Moderate

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

The idea behind Scharf Fund Retail and Thrivent Moderate Allocation 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.