Correlation Between Schwab Fundamental and First Trust

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

By analyzing existing cross correlation between Schwab Fundamental International and First Trust Intl, you can compare the effects of market volatilities on Schwab Fundamental and First Trust 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 Schwab Fundamental with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Fundamental and First Trust.

Diversification Opportunities for Schwab Fundamental and First Trust

0.97

Correlation Coefficient

Schwab Fundamental  First Trust

Almost no diversification

The 3 months correlation between Schwab and First is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Fundamental Internation and First Trust Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Intl and Schwab Fundamental 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 Schwab Fundamental International are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Intl has no effect on the direction of Schwab Fundamental i.e., Schwab Fundamental and First Trust go up and down completely randomly.

Pair Corralation between Schwab Fundamental and First Trust

Given the investment horizon of 90 days Schwab Fundamental is expected to generate 1.16 times less return on investment than First Trust. In addition to that, Schwab Fundamental is 1.19 times more volatile than First Trust Intl. It trades about 0.14 of its total potential returns per unit of risk. First Trust Intl is currently generating about 0.19 per unit of volatility. If you would invest  1,792  in First Trust Intl on May 5, 2025 and sell it today you would earn a total of  135.00  from holding First Trust Intl or generate 7.53% return on investment over 90 days.

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

Schwab Fundamental Internation  vs.  First Trust Intl

Schwab Fundamental

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Fundamental International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Schwab Fundamental may actually be approaching a critical reversion point that can send shares even higher in September 2025.

First Trust Intl

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Intl are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Schwab Fundamental and First Trust

The main advantage of trading using opposite Schwab Fundamental and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Fundamental position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.

The idea behind Schwab Fundamental International and First Trust Intl 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.