Correlation Between Scharf Global and Jpmorgan Growth
Can any of the company-specific risk be diversified away by investing in both Scharf Global and Jpmorgan Growth 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 Global and Jpmorgan Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scharf Global Opportunity and Jpmorgan Growth Advantage, you can compare the effects of market volatilities on Scharf Global and Jpmorgan Growth 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 Global with a short position of Jpmorgan Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scharf Global and Jpmorgan Growth.
Diversification Opportunities for Scharf Global and Jpmorgan Growth
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scharf and Jpmorgan is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Scharf Global Opportunity and Jpmorgan Growth Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Growth Advantage and Scharf Global 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 Global Opportunity are associated (or correlated) with Jpmorgan Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Growth Advantage has no effect on the direction of Scharf Global i.e., Scharf Global and Jpmorgan Growth go up and down completely randomly.
Pair Corralation between Scharf Global and Jpmorgan Growth
Assuming the 90 days horizon Scharf Global is expected to generate 3.3 times less return on investment than Jpmorgan Growth. But when comparing it to its historical volatility, Scharf Global Opportunity is 1.64 times less risky than Jpmorgan Growth. It trades about 0.13 of its potential returns per unit of risk. Jpmorgan Growth Advantage is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,954 in Jpmorgan Growth Advantage on September 7, 2024 and sell it today you would earn a total of 675.00 from holding Jpmorgan Growth Advantage or generate 17.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Scharf Global Opportunity vs. Jpmorgan Growth Advantage
Performance |
Timeline |
Scharf Global Opportunity |
Jpmorgan Growth Advantage |
Scharf Global and Jpmorgan Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Scharf Global and Jpmorgan Growth
The main advantage of trading using opposite Scharf Global and Jpmorgan Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scharf Global position performs unexpectedly, Jpmorgan Growth 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 Jpmorgan Growth will offset losses from the drop in Jpmorgan Growth's long position.Scharf Global vs. Auer Growth Fund | Scharf Global vs. Transamerica Emerging Markets | Scharf Global vs. Nasdaq 100 Index Fund | Scharf Global vs. Issachar Fund Class |
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Check out your portfolio center.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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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