Correlation Between Vanguard Extended and Schwab Long
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Schwab Long 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 Extended and Schwab Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Duration and Schwab Long Term Treasury, you can compare the effects of market volatilities on Vanguard Extended and Schwab Long 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 Extended with a short position of Schwab Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Schwab Long.
Diversification Opportunities for Vanguard Extended and Schwab Long
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Schwab is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Duration and Schwab Long Term Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Long Term and Vanguard Extended 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 Extended Duration are associated (or correlated) with Schwab Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Long Term has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Schwab Long go up and down completely randomly.
Pair Corralation between Vanguard Extended and Schwab Long
Considering the 90-day investment horizon Vanguard Extended Duration is expected to under-perform the Schwab Long. In addition to that, Vanguard Extended is 1.52 times more volatile than Schwab Long Term Treasury. It trades about -0.02 of its total potential returns per unit of risk. Schwab Long Term Treasury is currently generating about -0.01 per unit of volatility. If you would invest 3,399 in Schwab Long Term Treasury on November 2, 2024 and sell it today you would lose (233.00) from holding Schwab Long Term Treasury or give up 6.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Duration vs. Schwab Long Term Treasury
Performance |
| Timeline |
| Vanguard Extended |
| Schwab Long Term |
Vanguard Extended and Schwab Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Schwab Long
The main advantage of trading using opposite Vanguard Extended and Schwab Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Schwab Long 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 Long will offset losses from the drop in Schwab Long's long position.| Vanguard Extended vs. Vanguard Long Term Treasury | Vanguard Extended vs. Vanguard Long Term Corporate | Vanguard Extended vs. Vanguard Long Term Bond | Vanguard Extended vs. PIMCO 25 Year |
| Schwab Long vs. Schwab 1 5 Year | Schwab Long vs. Schwab 5 10 Year | Schwab Long vs. Schwab Intermediate Term Treasury | Schwab Long vs. Schwab Short Term Treasury |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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