Correlation Between Stifel Financial and Charles Schwab

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

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

Diversification Opportunities for Stifel Financial and Charles Schwab

0.76

Correlation Coefficient

Stifel Financial  Charles Schwab

Poor diversification

The 3 months correlation between Stifel and Charles is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial Corp and The Charles Schwab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Schwab and Stifel Financial 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 Stifel Financial Corp 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 Stifel Financial i.e., Stifel Financial and Charles Schwab go up and down completely randomly.

Pair Corralation between Stifel Financial and Charles Schwab

Assuming the 90 days horizon Stifel Financial Corp is expected to under-perform the Charles Schwab. In addition to that, Stifel Financial is 1.04 times more volatile than The Charles Schwab. It trades about -0.24 of its total potential returns per unit of risk. The Charles Schwab is currently generating about 0.0 per unit of volatility. If you would invest  1,955  in The Charles Schwab on February 1, 2025 and sell it today you would lose (1.00) from holding The Charles Schwab or give up 0.05% of portfolio value over 90 days.

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

Stifel Financial Corp  vs.  The Charles Schwab

Stifel Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stifel Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Charles Schwab

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Charles Schwab are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady forward-looking indicators, Charles Schwab is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Stifel Financial and Charles Schwab

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

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.