Correlation Between Charles Schwab and Stifel Financial
Can any of the company-specific risk be diversified away by investing in both Charles Schwab and Stifel Financial 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 Stifel Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Charles Schwab and Stifel Financial Corp, you can compare the effects of market volatilities on Charles Schwab and Stifel Financial 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 Stifel Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charles Schwab and Stifel Financial.
Diversification Opportunities for Charles Schwab and Stifel Financial
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Charles and Stifel is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Charles Schwab and Stifel Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stifel Financial Corp 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 The Charles Schwab are associated (or correlated) with Stifel Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stifel Financial Corp has no effect on the direction of Charles Schwab i.e., Charles Schwab and Stifel Financial go up and down completely randomly.
Pair Corralation between Charles Schwab and Stifel Financial
Assuming the 90 days trading horizon Charles Schwab is expected to generate 1.21 times less return on investment than Stifel Financial. But when comparing it to its historical volatility, The Charles Schwab is 1.81 times less risky than Stifel Financial. It trades about 0.04 of its potential returns per unit of risk. Stifel Financial Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,169 in Stifel Financial Corp on August 26, 2024 and sell it today you would earn a total of 304.00 from holding Stifel Financial Corp or generate 14.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Charles Schwab vs. Stifel Financial Corp
Performance |
| Timeline |
| Charles Schwab |
| Stifel Financial Corp |
Charles Schwab and Stifel Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charles Schwab and Stifel Financial
The main advantage of trading using opposite Charles Schwab and Stifel Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charles Schwab position performs unexpectedly, Stifel Financial 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 Stifel Financial will offset losses from the drop in Stifel Financial's long position.| Charles Schwab vs. Morgan Stanley | Charles Schwab vs. Morgan Stanley | Charles Schwab vs. Morgan Stanley | Charles Schwab vs. Morgan Stanley |
| Stifel Financial vs. Raymond James Financial | Stifel Financial vs. The Charles Schwab | Stifel Financial vs. The Charles Schwab | Stifel Financial vs. Jefferies Financial Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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