Correlation Between Oshaughnessy Market and Schwab Balanced

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

By analyzing existing cross correlation between Oshaughnessy Market Leaders and Schwab Balanced Fund, you can compare the effects of market volatilities on Oshaughnessy Market and Schwab Balanced 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 Oshaughnessy Market with a short position of Schwab Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oshaughnessy Market and Schwab Balanced.

Diversification Opportunities for Oshaughnessy Market and Schwab Balanced

0.73

Correlation Coefficient

Oshaughnessy Market  Schwab Balanced

Poor diversification

The 3 months correlation between Oshaughnessy and Schwab is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Oshaughnessy Market Leaders and Schwab Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Balanced and Oshaughnessy Market 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 Oshaughnessy Market Leaders are associated (or correlated) with Schwab Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Balanced has no effect on the direction of Oshaughnessy Market i.e., Oshaughnessy Market and Schwab Balanced go up and down completely randomly.

Pair Corralation between Oshaughnessy Market and Schwab Balanced

Assuming the 90 days horizon Oshaughnessy Market Leaders is expected to generate 1.26 times more return on investment than Schwab Balanced. However, Oshaughnessy Market is 1.26 times more volatile than Schwab Balanced Fund. It trades about 0.01 of its potential returns per unit of risk. Schwab Balanced Fund is currently generating about -0.1 per unit of risk. If you would invest  1,958  in Oshaughnessy Market Leaders on December 23, 2024 and sell it today you would earn a total of  2.00  from holding Oshaughnessy Market Leaders or generate 0.1% return on investment over 90 days.

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

Oshaughnessy Market Leaders  vs.  Schwab Balanced Fund

Oshaughnessy Market

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oshaughnessy Market Leaders has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Oshaughnessy Market is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Schwab Balanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Schwab Balanced Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Schwab Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Oshaughnessy Market and Schwab Balanced

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

The idea behind Oshaughnessy Market Leaders and Schwab Balanced Fund 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.