Correlation Between Inpex Corp and Schwab Strategic

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

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

Diversification Opportunities for Inpex Corp and Schwab Strategic

-0.59

Correlation Coefficient

Inpex Corp  Schwab Strategic

Excellent diversification

The 3 months correlation between Inpex and Schwab is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Inpex Corp ADR and Schwab Strategic Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Strategic Trust and Inpex Corp 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 Inpex Corp ADR are associated (or correlated) with Schwab Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Strategic Trust has no effect on the direction of Inpex Corp i.e., Inpex Corp and Schwab Strategic go up and down completely randomly.

Pair Corralation between Inpex Corp and Schwab Strategic

Assuming the 90 days horizon Inpex Corp ADR is expected to under-perform the Schwab Strategic. But the pink sheet apears to be less risky and, when comparing its historical volatility, Inpex Corp ADR is 2.39 times less risky than Schwab Strategic. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Schwab Strategic Trust is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,087  in Schwab Strategic Trust on September 5, 2024 and sell it today you would earn a total of  2,133  from holding Schwab Strategic Trust or generate 69.1% return on investment over 90 days.

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

Inpex Corp ADR  vs.  Schwab Strategic Trust

Inpex Corp ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inpex Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Inpex Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Schwab Strategic Trust

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Strategic Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Schwab Strategic exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inpex Corp and Schwab Strategic

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

The idea behind Inpex Corp ADR and Schwab Strategic Trust 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.