Correlation Between Carlyle and Charles Schwab

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

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

Diversification Opportunities for Carlyle and Charles Schwab

0.42

Correlation Coefficient

Carlyle  Charles Schwab

Very weak diversification

The 3 months correlation between Carlyle and Charles is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Charles Schwab Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Schwab Corp and Carlyle 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 Carlyle Group are associated (or correlated) with Charles Schwab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles Schwab Corp has no effect on the direction of Carlyle i.e., Carlyle and Charles Schwab go up and down completely randomly.

Pair Corralation between Carlyle and Charles Schwab

Allowing for the 90-day total investment horizon Carlyle Group is expected to under-perform the Charles Schwab. In addition to that, Carlyle is 1.49 times more volatile than Charles Schwab Corp. It trades about -0.08 of its total potential returns per unit of risk. Charles Schwab Corp is currently generating about 0.06 per unit of volatility. If you would invest  7,369  in Charles Schwab Corp on December 30, 2024 and sell it today you would earn a total of  412.00  from holding Charles Schwab Corp or generate 5.59% return on investment over 90 days.

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

Carlyle Group  vs.  Charles Schwab Corp

Carlyle Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Charles Schwab Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Charles Schwab Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical indicators, Charles Schwab may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Carlyle and Charles Schwab

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

The idea behind Carlyle Group and Charles Schwab Corp 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.

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.