Correlation Between Vanguard Dividend and Schwab Dividend

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

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

Diversification Opportunities for Vanguard Dividend and Schwab Dividend

0.95

Correlation Coefficient

Vanguard Dividend  Schwab Dividend

Almost no diversification

The 3 months correlation between Vanguard and Schwab is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Dividend Appreciation and Schwab Dividend Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Dividend Equity and Vanguard Dividend 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 Vanguard Dividend Appreciation are associated (or correlated) with Schwab Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Dividend Equity has no effect on the direction of Vanguard Dividend i.e., Vanguard Dividend and Schwab Dividend go up and down completely randomly.

Pair Corralation between Vanguard Dividend and Schwab Dividend

Considering the 90-day investment horizon Vanguard Dividend Appreciation is expected to generate 0.84 times more return on investment than Schwab Dividend. However, Vanguard Dividend Appreciation is 1.18 times less risky than Schwab Dividend. It trades about 0.2 of its potential returns per unit of risk. Schwab Dividend Equity is currently generating about 0.1 per unit of risk. If you would invest  18,996  in Vanguard Dividend Appreciation on May 6, 2025 and sell it today you would earn a total of  1,683  from holding Vanguard Dividend Appreciation or generate 8.86% return on investment over 90 days.

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

Vanguard Dividend Appreciation  vs.  Schwab Dividend Equity

Vanguard Dividend

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Dividend Appreciation are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward indicators, Vanguard Dividend may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Schwab Dividend Equity

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Dividend Equity are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Schwab Dividend is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vanguard Dividend and Schwab Dividend

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

The idea behind Vanguard Dividend Appreciation and Schwab Dividend Equity 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 Stocks Directory module to find actively traded stocks across global markets.