Correlation Between Schwab Strategic and Global X

Can any of the company-specific risk be diversified away by investing in both Schwab Strategic 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 Strategic 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 Strategic Trust and Global X Robotics, you can compare the effects of market volatilities on Schwab Strategic 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 Strategic with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Strategic and Global X.

Diversification Opportunities for Schwab Strategic and Global X

0.86

Correlation Coefficient

Schwab Strategic  Global X

Very poor diversification

The 3 months correlation between Schwab and Global is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Strategic Trust and Global X Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Robotics and Schwab Strategic 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 Strategic Trust 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 Robotics has no effect on the direction of Schwab Strategic i.e., Schwab Strategic and Global X go up and down completely randomly.

Pair Corralation between Schwab Strategic and Global X

Given the investment horizon of 90 days Schwab Strategic Trust is expected to generate 3.98 times more return on investment than Global X. However, Schwab Strategic is 3.98 times more volatile than Global X Robotics. It trades about 0.2 of its potential returns per unit of risk. Global X Robotics is currently generating about 0.15 per unit of risk. If you would invest  3,218  in Schwab Strategic Trust on September 12, 2024 and sell it today you would earn a total of  2,001  from holding Schwab Strategic Trust or generate 62.18% return on investment over 90 days.

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

Schwab Strategic Trust  vs.  Global X Robotics

Schwab Strategic Trust

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Strategic Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Schwab Strategic exhibited solid returns over the last few months and may actually be approaching a breakup point.

Global X Robotics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Robotics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Schwab Strategic and Global X

The main advantage of trading using opposite Schwab Strategic and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Strategic 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 Strategic Trust and Global X Robotics 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.