Correlation Between INVEX Controladora and Charles Schwab

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

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

Diversification Opportunities for INVEX Controladora and Charles Schwab

-0.06

Correlation Coefficient

INVEX Controladora  Charles Schwab

Good diversification

The 3 months correlation between INVEX and Charles is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding INVEX Controladora SAB and The Charles Schwab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Schwab and INVEX Controladora 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 INVEX Controladora SAB 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 INVEX Controladora i.e., INVEX Controladora and Charles Schwab go up and down completely randomly.

Pair Corralation between INVEX Controladora and Charles Schwab

Assuming the 90 days trading horizon INVEX Controladora is expected to generate 9.55 times less return on investment than Charles Schwab. But when comparing it to its historical volatility, INVEX Controladora SAB is 5.11 times less risky than Charles Schwab. It trades about 0.02 of its potential returns per unit of risk. The Charles Schwab is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  134,199  in The Charles Schwab on September 29, 2024 and sell it today you would earn a total of  13,601  from holding The Charles Schwab or generate 10.13% return on investment over 90 days.

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

INVEX Controladora SAB  vs.  The Charles Schwab

INVEX Controladora SAB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INVEX Controladora SAB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, INVEX Controladora is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Charles Schwab

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Charles Schwab are ranked lower than 11 (%) 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 INVEX Controladora and Charles Schwab

The main advantage of trading using opposite INVEX Controladora and Charles Schwab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INVEX Controladora 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 INVEX Controladora SAB 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.