Correlation Between Global X and Schwab Fundamental

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

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

Diversification Opportunities for Global X and Schwab Fundamental

0.28

Correlation Coefficient

Global X  Schwab Fundamental

Modest diversification

The 3 months correlation between Global and Schwab is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Global X MSCI and Schwab Fundamental Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Fundamental and Global X 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 Global X MSCI 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 has no effect on the direction of Global X i.e., Global X and Schwab Fundamental go up and down completely randomly.

Pair Corralation between Global X and Schwab Fundamental

Given the investment horizon of 90 days Global X MSCI is expected to generate 0.55 times more return on investment than Schwab Fundamental. However, Global X MSCI is 1.81 times less risky than Schwab Fundamental. It trades about 0.12 of its potential returns per unit of risk. Schwab Fundamental Emerging is currently generating about -0.07 per unit of risk. If you would invest  1,419  in Global X MSCI on September 15, 2024 and sell it today you would earn a total of  27.00  from holding Global X MSCI or generate 1.9% return on investment over 90 days.

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

Global X MSCI  vs.  Schwab Fundamental Emerging

Global X MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Global X is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Schwab Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab Fundamental Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Schwab Fundamental is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global X and Schwab Fundamental

The main advantage of trading using opposite Global X and Schwab Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X MSCI and Schwab Fundamental Emerging 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 CEOs Directory module to screen CEOs from public companies around the world.