Correlation Between Charles Schwab and Sixty Six

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

By analyzing existing cross correlation between Charles Schwab Corp and Sixty Six Capital, you can compare the effects of market volatilities on Charles Schwab and Sixty Six 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 Sixty Six. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charles Schwab and Sixty Six.

Diversification Opportunities for Charles Schwab and Sixty Six

0.89

Correlation Coefficient

Charles Schwab  Sixty Six

Very poor diversification

The 3 months correlation between Charles and Sixty is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Charles Schwab Corp and Sixty Six Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixty Six Capital 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 Charles Schwab Corp are associated (or correlated) with Sixty Six. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixty Six Capital has no effect on the direction of Charles Schwab i.e., Charles Schwab and Sixty Six go up and down completely randomly.

Pair Corralation between Charles Schwab and Sixty Six

Given the investment horizon of 90 days Charles Schwab is expected to generate 5.37 times less return on investment than Sixty Six. But when comparing it to its historical volatility, Charles Schwab Corp is 4.9 times less risky than Sixty Six. It trades about 0.24 of its potential returns per unit of risk. Sixty Six Capital is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1.93  in Sixty Six Capital on August 30, 2024 and sell it today you would earn a total of  4.12  from holding Sixty Six Capital or generate 213.47% return on investment over 90 days.

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

Charles Schwab Corp  vs.  Sixty Six Capital

Charles Schwab Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Charles Schwab Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical indicators, Charles Schwab showed solid returns over the last few months and may actually be approaching a breakup point.

Sixty Six Capital

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sixty Six Capital are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, Sixty Six reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charles Schwab and Sixty Six

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

The idea behind Charles Schwab Corp and Sixty Six Capital 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.