Correlation Between Charles Schwab and FlatexDEGIRO

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

Diversification Opportunities for Charles Schwab and FlatexDEGIRO

0.42

Correlation Coefficient

Charles Schwab  FlatexDEGIRO

Very weak diversification

The 3 months correlation between Charles and FlatexDEGIRO is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding The Charles Schwab and flatexDEGIRO AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on flatexDEGIRO AG 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 FlatexDEGIRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of flatexDEGIRO AG has no effect on the direction of Charles Schwab i.e., Charles Schwab and FlatexDEGIRO go up and down completely randomly.

Pair Corralation between Charles Schwab and FlatexDEGIRO

Assuming the 90 days horizon Charles Schwab is expected to generate 2.0 times less return on investment than FlatexDEGIRO. In addition to that, Charles Schwab is 1.26 times more volatile than flatexDEGIRO AG. It trades about 0.02 of its total potential returns per unit of risk. flatexDEGIRO AG is currently generating about 0.06 per unit of volatility. If you would invest  1,319  in flatexDEGIRO AG on September 23, 2024 and sell it today you would earn a total of  160.00  from holding flatexDEGIRO AG or generate 12.13% return on investment over 90 days.

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

The Charles Schwab  vs.  flatexDEGIRO AG

Charles Schwab

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Charles Schwab are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Charles Schwab reported solid returns over the last few months and may actually be approaching a breakup point.

flatexDEGIRO AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in flatexDEGIRO AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, FlatexDEGIRO unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charles Schwab and FlatexDEGIRO

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

The idea behind The Charles Schwab and flatexDEGIRO AG 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.