Correlation Between Charles Schwab and Bitcoin Depot

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

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

Diversification Opportunities for Charles Schwab and Bitcoin Depot

-0.26

Correlation Coefficient

Charles Schwab  Bitcoin Depot

Very good diversification

The 3 months correlation between Charles and Bitcoin is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding The Charles Schwab and Bitcoin Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin Depot and Charles Schwab 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 The Charles Schwab are associated (or correlated) with Bitcoin Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin Depot has no effect on the direction of Charles Schwab i.e., Charles Schwab and Bitcoin Depot go up and down completely randomly.

Pair Corralation between Charles Schwab and Bitcoin Depot

Assuming the 90 days trading horizon The Charles Schwab is expected to generate 0.23 times more return on investment than Bitcoin Depot. However, The Charles Schwab is 4.34 times less risky than Bitcoin Depot. It trades about 0.08 of its potential returns per unit of risk. Bitcoin Depot is currently generating about 0.01 per unit of risk. If you would invest  1,864  in The Charles Schwab on December 27, 2024 and sell it today you would earn a total of  84.00  from holding The Charles Schwab or generate 4.51% return on investment over 90 days.

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

The Charles Schwab  vs.  Bitcoin Depot

Charles Schwab

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Charles Schwab are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady forward-looking indicators, Charles Schwab is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Bitcoin Depot

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Depot are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Bitcoin Depot is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Charles Schwab and Bitcoin Depot

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

The idea behind The Charles Schwab and Bitcoin Depot 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.