Correlation Between Charles Schwab and Carlyle

Can any of the company-specific risk be diversified away by investing in both Charles Schwab and Carlyle 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 Carlyle 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 The Carlyle Group, you can compare the effects of market volatilities on Charles Schwab and Carlyle 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 Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charles Schwab and Carlyle.

Diversification Opportunities for Charles Schwab and Carlyle

0.87

Correlation Coefficient

Charles Schwab  Carlyle

Very poor diversification

The 3 months correlation between Charles and Carlyle is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding The Charles Schwab and The Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group 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 Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of Charles Schwab i.e., Charles Schwab and Carlyle go up and down completely randomly.

Pair Corralation between Charles Schwab and Carlyle

Assuming the 90 days trading horizon The Charles Schwab is expected to generate 0.88 times more return on investment than Carlyle. However, The Charles Schwab is 1.14 times less risky than Carlyle. It trades about -0.32 of its potential returns per unit of risk. The Carlyle Group is currently generating about -0.3 per unit of risk. If you would invest  2,087  in The Charles Schwab on September 24, 2024 and sell it today you would lose (115.00) from holding The Charles Schwab or give up 5.51% of portfolio value over 90 days.

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

The Charles Schwab  vs.  The Carlyle Group

Charles Schwab

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Charles Schwab has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Preferred Stock's forward-looking indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Carlyle Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Charles Schwab and Carlyle

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

The idea behind The Charles Schwab and The Carlyle Group 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.