Correlation Between Aquagold International and Schwab Fundamental

Can any of the company-specific risk be diversified away by investing in both Aquagold International and Schwab Fundamental 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 Aquagold International and Schwab Fundamental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquagold International and Schwab Fundamental Small, you can compare the effects of market volatilities on Aquagold International and Schwab Fundamental 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 Aquagold International with a short position of Schwab Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Schwab Fundamental.

Diversification Opportunities for Aquagold International and Schwab Fundamental

0.21

Correlation Coefficient

Aquagold International  Schwab Fundamental

Modest diversification

The 3 months correlation between Aquagold and Schwab is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Schwab Fundamental Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Fundamental Small and Aquagold International 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 Aquagold International are associated (or correlated) with Schwab Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Fundamental Small has no effect on the direction of Aquagold International i.e., Aquagold International and Schwab Fundamental go up and down completely randomly.

Pair Corralation between Aquagold International and Schwab Fundamental

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Schwab Fundamental. In addition to that, Aquagold International is 5.89 times more volatile than Schwab Fundamental Small. It trades about -0.13 of its total potential returns per unit of risk. Schwab Fundamental Small is currently generating about -0.11 per unit of volatility. If you would invest  3,013  in Schwab Fundamental Small on December 26, 2024 and sell it today you would lose (215.00) from holding Schwab Fundamental Small or give up 7.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Aquagold International  vs.  Schwab Fundamental Small

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Schwab Fundamental Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Schwab Fundamental Small has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Aquagold International and Schwab Fundamental

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

The idea behind Aquagold International and Schwab Fundamental Small 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.