Correlation Between Futu Holdings and Charles Schwab
Can any of the company-specific risk be diversified away by investing in both Futu Holdings 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 Futu Holdings and Charles Schwab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Futu Holdings and The Charles Schwab, you can compare the effects of market volatilities on Futu Holdings 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 Futu Holdings with a short position of Charles Schwab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Futu Holdings and Charles Schwab.
Diversification Opportunities for Futu Holdings and Charles Schwab
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Futu and Charles is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Futu Holdings and The Charles Schwab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Schwab and Futu Holdings 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 Futu Holdings 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 Futu Holdings i.e., Futu Holdings and Charles Schwab go up and down completely randomly.
Pair Corralation between Futu Holdings and Charles Schwab
Given the investment horizon of 90 days Futu Holdings is expected to generate 3.12 times more return on investment than Charles Schwab. However, Futu Holdings is 3.12 times more volatile than The Charles Schwab. It trades about 0.05 of its potential returns per unit of risk. The Charles Schwab is currently generating about 0.02 per unit of risk. If you would invest 5,050 in Futu Holdings on August 27, 2024 and sell it today you would earn a total of 3,372 from holding Futu Holdings or generate 66.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Futu Holdings vs. The Charles Schwab
Performance |
| Timeline |
| Futu Holdings |
| Charles Schwab |
Futu Holdings and Charles Schwab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Futu Holdings and Charles Schwab
The main advantage of trading using opposite Futu Holdings and Charles Schwab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Futu Holdings 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.| Futu Holdings vs. Bit Digital | Futu Holdings vs. Xp Inc | Futu Holdings vs. Magic Empire Global | Futu Holdings vs. Applied Blockchain |
| Charles Schwab vs. The Charles Schwab | Charles Schwab vs. JPMorgan Chase Co | Charles Schwab vs. Morgan Stanley | Charles Schwab vs. JPMorgan Chase Co |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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