Correlation Between Schwager and Sociedad Matriz

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

By analyzing existing cross correlation between Schwager and Sociedad Matriz SAAM, you can compare the effects of market volatilities on Schwager and Sociedad Matriz 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 Schwager with a short position of Sociedad Matriz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwager and Sociedad Matriz.

Diversification Opportunities for Schwager and Sociedad Matriz

0.05

Correlation Coefficient

Schwager  Sociedad Matriz

Significant diversification

The 3 months correlation between Schwager and Sociedad is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Schwager and Sociedad Matriz SAAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad Matriz SAAM and Schwager 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 Schwager are associated (or correlated) with Sociedad Matriz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad Matriz SAAM has no effect on the direction of Schwager i.e., Schwager and Sociedad Matriz go up and down completely randomly.

Pair Corralation between Schwager and Sociedad Matriz

Assuming the 90 days trading horizon Schwager is expected to generate 1.73 times less return on investment than Sociedad Matriz. But when comparing it to its historical volatility, Schwager is 1.36 times less risky than Sociedad Matriz. It trades about 0.0 of its potential returns per unit of risk. Sociedad Matriz SAAM is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  10,199  in Sociedad Matriz SAAM on September 5, 2024 and sell it today you would lose (3.00) from holding Sociedad Matriz SAAM or give up 0.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.92%
Values	Daily Returns

Schwager  vs.  Sociedad Matriz SAAM

Schwager

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwager has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Schwager is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Sociedad Matriz SAAM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sociedad Matriz SAAM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sociedad Matriz is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Schwager and Sociedad Matriz

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

The idea behind Schwager and Sociedad Matriz SAAM 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.