Correlation Between Scharf Fund and Rbc Smid

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

Diversification Opportunities for Scharf Fund and Rbc Smid

0.83

Correlation Coefficient

Scharf Fund  Rbc Smid

Very poor diversification

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

Pair Corralation between Scharf Fund and Rbc Smid

Assuming the 90 days horizon Scharf Fund is expected to generate 1.36 times less return on investment than Rbc Smid. But when comparing it to its historical volatility, Scharf Fund Retail is 1.86 times less risky than Rbc Smid. It trades about 0.09 of its potential returns per unit of risk. Rbc Smid Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,241  in Rbc Smid Cap on September 14, 2024 and sell it today you would earn a total of  108.00  from holding Rbc Smid Cap or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.21%
Values	Daily Returns

Scharf Fund Retail  vs.  Rbc Smid Cap

Scharf Fund Retail

Risk-Adjusted Performance

2 of 100

Weak

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.

Rbc Smid Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc Smid Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Rbc Smid 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 Rbc Smid

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

The idea behind Scharf Fund Retail and Rbc Smid Cap 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 Stocks Directory module to find actively traded stocks across global markets.