Correlation Between British Amer and Charles Schwab

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Can any of the company-specific risk be diversified away by investing in both British Amer 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 British Amer and Charles Schwab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and The Charles Schwab, you can compare the effects of market volatilities on British Amer 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 British Amer with a short position of Charles Schwab. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Amer and Charles Schwab.

Diversification Opportunities for British Amer and Charles Schwab

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between British and Charles is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and The Charles Schwab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Schwab and British Amer 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 British American Tobacco 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 British Amer i.e., British Amer and Charles Schwab go up and down completely randomly.

Pair Corralation between British Amer and Charles Schwab

Considering the 90-day investment horizon British American Tobacco is expected to under-perform the Charles Schwab. In addition to that, British Amer is 1.32 times more volatile than The Charles Schwab. It trades about -0.2 of its total potential returns per unit of risk. The Charles Schwab is currently generating about 0.14 per unit of volatility. If you would invest  7,047  in The Charles Schwab on July 6, 2022 and sell it today you would earn a total of  274.00  from holding The Charles Schwab or generate 3.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

British American Tobacco  vs.  The Charles Schwab

 Performance (%) 
       Timeline  
British American Tobacco 
British Performance
0 of 100
Over the last 90 days British American Tobacco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

British Price Channel

Charles Schwab 
Charles Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The Charles Schwab are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical indicators, Charles Schwab showed solid returns over the last few months and may actually be approaching a breakup point.

Charles Price Channel

British Amer and Charles Schwab Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with British Amer and Charles Schwab

The main advantage of trading using opposite British Amer and Charles Schwab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Amer 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.
British Amer vs. Amazon Inc
The idea behind British American Tobacco and The Charles Schwab 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.
Charles Schwab vs. Amazon Inc
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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