Correlation Between Fondo Mutuo and Schwager

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

By analyzing existing cross correlation between Fondo Mutuo ETF and Schwager, you can compare the effects of market volatilities on Fondo Mutuo and Schwager 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 Fondo Mutuo with a short position of Schwager. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fondo Mutuo and Schwager.

Diversification Opportunities for Fondo Mutuo and Schwager

0.61

Correlation Coefficient

Fondo Mutuo  Schwager

Poor diversification

The 3 months correlation between Fondo and Schwager is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fondo Mutuo ETF and Schwager in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwager and Fondo Mutuo 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 Fondo Mutuo ETF are associated (or correlated) with Schwager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwager has no effect on the direction of Fondo Mutuo i.e., Fondo Mutuo and Schwager go up and down completely randomly.

Pair Corralation between Fondo Mutuo and Schwager

Assuming the 90 days trading horizon Fondo Mutuo is expected to generate 3.1 times less return on investment than Schwager. But when comparing it to its historical volatility, Fondo Mutuo ETF is 4.99 times less risky than Schwager. It trades about 0.29 of its potential returns per unit of risk. Schwager is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Schwager on December 27, 2024 and sell it today you would earn a total of  44.00  from holding Schwager or generate 41.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Fondo Mutuo ETF  vs.  Schwager

Fondo Mutuo ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fondo Mutuo ETF are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Fondo Mutuo may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Schwager

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Schwager are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Schwager exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fondo Mutuo and Schwager

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

The idea behind Fondo Mutuo ETF and Schwager 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.