Correlation Between Schwab E and Ssga International

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

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

Diversification Opportunities for Schwab E and Ssga International

-0.52

Correlation Coefficient

Schwab E  Ssga International

Excellent diversification

The 3 months correlation between Schwab and Ssga is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Schwab E Equity and Ssga International Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssga International Stock and Schwab E 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 E Equity are associated (or correlated) with Ssga International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssga International Stock has no effect on the direction of Schwab E i.e., Schwab E and Ssga International go up and down completely randomly.

Pair Corralation between Schwab E and Ssga International

Assuming the 90 days horizon Schwab E Equity is expected to under-perform the Ssga International. In addition to that, Schwab E is 1.25 times more volatile than Ssga International Stock. It trades about -0.08 of its total potential returns per unit of risk. Ssga International Stock is currently generating about 0.22 per unit of volatility. If you would invest  1,127  in Ssga International Stock on December 26, 2024 and sell it today you would earn a total of  126.00  from holding Ssga International Stock or generate 11.18% return on investment over 90 days.

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

Schwab E Equity  vs.  Ssga International Stock

Schwab E Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Schwab E Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Schwab E is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ssga International Stock

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ssga International Stock are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Ssga International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Schwab E and Ssga International

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

The idea behind Schwab E Equity and Ssga International Stock 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.