Correlation Between Wirecard and Charles Schwab

Can any of the company-specific risk be diversified away by investing in both Wirecard 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 Wirecard and Charles Schwab into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wirecard AG and Charles Schwab Corp, you can compare the effects of market volatilities on Wirecard 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 Wirecard with a short position of Charles Schwab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wirecard and Charles Schwab.

Diversification Opportunities for Wirecard and Charles Schwab

0.21

Correlation Coefficient

Wirecard  Charles Schwab

Modest diversification

The 3 months correlation between Wirecard and Charles is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Wirecard AG 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 Wirecard 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 Wirecard AG 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 Wirecard i.e., Wirecard and Charles Schwab go up and down completely randomly.

Pair Corralation between Wirecard and Charles Schwab

Assuming the 90 days horizon Wirecard AG is expected to generate 45.22 times more return on investment than Charles Schwab. However, Wirecard is 45.22 times more volatile than Charles Schwab Corp. It trades about 0.12 of its potential returns per unit of risk. Charles Schwab Corp is currently generating about 0.26 per unit of risk. If you would invest  1.00  in Wirecard AG on January 26, 2024 and sell it today you would lose (0.50) from holding Wirecard AG or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Wirecard AG  vs.  Charles Schwab Corp

Wirecard AG

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wirecard AG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Wirecard reported solid returns over the last few months and may actually be approaching a breakup point.

Charles Schwab Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Charles Schwab Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical indicators, Charles Schwab showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wirecard and Charles Schwab

The main advantage of trading using opposite Wirecard and Charles Schwab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wirecard 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.

The idea behind Wirecard AG and Charles Schwab Corp 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.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.