Correlation Between Schwab International and Global X

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

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

Diversification Opportunities for Schwab International and Global X

0.83

Correlation Coefficient

Schwab International  Global X

Very poor diversification

The 3 months correlation between Schwab and Global is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Schwab International Equity and Global X Interest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Interest and Schwab International 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 Schwab International Equity are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Interest has no effect on the direction of Schwab International i.e., Schwab International and Global X go up and down completely randomly.

Pair Corralation between Schwab International and Global X

Given the investment horizon of 90 days Schwab International Equity is expected to generate 2.06 times more return on investment than Global X. However, Schwab International is 2.06 times more volatile than Global X Interest. It trades about 0.05 of its potential returns per unit of risk. Global X Interest is currently generating about -0.02 per unit of risk. If you would invest  1,727  in Schwab International Equity on September 14, 2024 and sell it today you would earn a total of  178.00  from holding Schwab International Equity or generate 10.31% return on investment over 90 days.

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

Schwab International Equity  vs.  Global X Interest

Schwab International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab International Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Schwab International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Global X Interest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Interest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Pair Trading with Schwab International and Global X

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

The idea behind Schwab International Equity and Global X Interest 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..