Correlation Between Charles Schwab and Armada Mercantile

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

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

Diversification Opportunities for Charles Schwab and Armada Mercantile

0.41

Correlation Coefficient

Charles Schwab  Armada Mercantile

Very weak diversification

The 3 months correlation between Charles and Armada is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding The Charles Schwab and Armada Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Mercantile and Charles Schwab 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 The Charles Schwab are associated (or correlated) with Armada Mercantile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Mercantile has no effect on the direction of Charles Schwab i.e., Charles Schwab and Armada Mercantile go up and down completely randomly.

Pair Corralation between Charles Schwab and Armada Mercantile

Assuming the 90 days trading horizon Charles Schwab is expected to generate 4.43 times less return on investment than Armada Mercantile. But when comparing it to its historical volatility, The Charles Schwab is 20.32 times less risky than Armada Mercantile. It trades about 0.11 of its potential returns per unit of risk. Armada Mercantile is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Armada Mercantile on May 6, 2025 and sell it today you would lose (1.00) from holding Armada Mercantile or give up 4.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

The Charles Schwab  vs.  Armada Mercantile

Charles Schwab

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Charles Schwab are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Charles Schwab is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Armada Mercantile

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Armada Mercantile are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Armada Mercantile may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Charles Schwab and Armada Mercantile

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

The idea behind The Charles Schwab and Armada Mercantile 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..