Correlation Between Macquarie Group and Charles Schwab
Can any of the company-specific risk be diversified away by investing in both Macquarie Group 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 Macquarie Group and Charles Schwab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Macquarie Group Ltd and Charles Schwab Corp, you can compare the effects of market volatilities on Macquarie Group 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 Macquarie Group with a short position of Charles Schwab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macquarie Group and Charles Schwab.
Diversification Opportunities for Macquarie Group and Charles Schwab
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Macquarie and Charles is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Macquarie Group Ltd and Charles Schwab Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Schwab Corp and Macquarie Group 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 Macquarie Group Ltd 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 Corp has no effect on the direction of Macquarie Group i.e., Macquarie Group and Charles Schwab go up and down completely randomly.
Pair Corralation between Macquarie Group and Charles Schwab
Assuming the 90 days horizon Macquarie Group Ltd is expected to under-perform the Charles Schwab. But the pink sheet apears to be less risky and, when comparing its historical volatility, Macquarie Group Ltd is 1.4 times less risky than Charles Schwab. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Charles Schwab Corp is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 6,420 in Charles Schwab Corp on August 28, 2024 and sell it today you would earn a total of 1,805 from holding Charles Schwab Corp or generate 28.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Macquarie Group Ltd vs. Charles Schwab Corp
Performance |
| Timeline |
| Macquarie Group |
| Charles Schwab Corp |
Macquarie Group and Charles Schwab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Macquarie Group and Charles Schwab
The main advantage of trading using opposite Macquarie Group and Charles Schwab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macquarie Group 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.| Macquarie Group vs. Morgan Stanley | Macquarie Group vs. Goldman Sachs Group | Macquarie Group vs. Charles Schwab Corp | Macquarie Group vs. Interactive Brokers Group |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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