Correlation Between Ssga International and Schwab Core
Can any of the company-specific risk be diversified away by investing in both Ssga International and Schwab Core 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 Ssga International and Schwab Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ssga International Stock and Schwab E Equity, you can compare the effects of market volatilities on Ssga International and Schwab Core 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 Ssga International with a short position of Schwab Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ssga International and Schwab Core.
Diversification Opportunities for Ssga International and Schwab Core
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ssga and Schwab is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ssga International Stock and Schwab E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab E Equity and Ssga International 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 Ssga International Stock are associated (or correlated) with Schwab Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab E Equity has no effect on the direction of Ssga International i.e., Ssga International and Schwab Core go up and down completely randomly.
Pair Corralation between Ssga International and Schwab Core
Assuming the 90 days horizon Ssga International Stock is expected to generate 0.78 times more return on investment than Schwab Core. However, Ssga International Stock is 1.28 times less risky than Schwab Core. It trades about 0.09 of its potential returns per unit of risk. Schwab E Equity is currently generating about 0.07 per unit of risk. If you would invest 1,082 in Ssga International Stock on October 21, 2024 and sell it today you would earn a total of 13.00 from holding Ssga International Stock or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ssga International Stock vs. Schwab E Equity
Performance |
| Timeline |
| Ssga International Stock |
| Schwab E Equity |
Ssga International and Schwab Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ssga International and Schwab Core
The main advantage of trading using opposite Ssga International and Schwab Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ssga International position performs unexpectedly, Schwab Core 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 Schwab Core will offset losses from the drop in Schwab Core's long position.| Ssga International vs. Schwab E Equity | Ssga International vs. Harding Loevner Emerging | Ssga International vs. Schwab Large Cap Growth | Ssga International vs. Schwab Dividend Equity |
| Schwab Core vs. Schwab Dividend Equity | Schwab Core vs. Schwab Large Cap Growth | Schwab Core vs. Ssga International Stock | Schwab Core vs. Schwab Small Cap Equity |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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