Correlation Between Value Grupo and Charles Schwab

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

By analyzing existing cross correlation between Value Grupo Financiero and The Charles Schwab, you can compare the effects of market volatilities on Value Grupo and Charles Schwab 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 Value Grupo with a short position of Charles Schwab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Grupo and Charles Schwab.

Diversification Opportunities for Value Grupo and Charles Schwab

-0.05

Correlation Coefficient

Value Grupo  Charles Schwab

Good diversification

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

Pair Corralation between Value Grupo and Charles Schwab

Assuming the 90 days trading horizon Value Grupo is expected to generate 4.09 times less return on investment than Charles Schwab. In addition to that, Value Grupo is 1.03 times more volatile than The Charles Schwab. It trades about 0.03 of its total potential returns per unit of risk. The Charles Schwab is currently generating about 0.11 per unit of volatility. If you would invest  147,331  in The Charles Schwab on December 29, 2024 and sell it today you would earn a total of  19,569  from holding The Charles Schwab or generate 13.28% return on investment over 90 days.

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

Value Grupo Financiero  vs.  The Charles Schwab

Value Grupo Financiero

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Value Grupo Financiero are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Value Grupo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Charles Schwab

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Charles Schwab are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Charles Schwab showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Value Grupo and Charles Schwab

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

The idea behind Value Grupo Financiero and The Charles Schwab 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.