Correlation Between IShares IBoxx and Schwab Strategic
Can any of the company-specific risk be diversified away by investing in both IShares IBoxx and Schwab Strategic 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 IShares IBoxx and Schwab Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares iBoxx High and Schwab Strategic Trust, you can compare the effects of market volatilities on IShares IBoxx and Schwab Strategic 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 IShares IBoxx with a short position of Schwab Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares IBoxx and Schwab Strategic.
Diversification Opportunities for IShares IBoxx and Schwab Strategic
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Schwab is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx High and Schwab Strategic Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Strategic Trust and IShares IBoxx 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 iShares iBoxx High are associated (or correlated) with Schwab Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Strategic Trust has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Schwab Strategic go up and down completely randomly.
Pair Corralation between IShares IBoxx and Schwab Strategic
Considering the 90-day investment horizon IShares IBoxx is expected to generate 1.0 times less return on investment than Schwab Strategic. But when comparing it to its historical volatility, iShares iBoxx High is 1.08 times less risky than Schwab Strategic. It trades about 0.37 of its potential returns per unit of risk. Schwab Strategic Trust is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 2,622 in Schwab Strategic Trust on September 1, 2024 and sell it today you would earn a total of 43.00 from holding Schwab Strategic Trust or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares iBoxx High vs. Schwab Strategic Trust
Performance |
| Timeline |
| iShares iBoxx High |
| Schwab Strategic Trust |
IShares IBoxx and Schwab Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares IBoxx and Schwab Strategic
The main advantage of trading using opposite IShares IBoxx and Schwab Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares IBoxx position performs unexpectedly, Schwab Strategic 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 Strategic will offset losses from the drop in Schwab Strategic's long position.| IShares IBoxx vs. iShares iBoxx Investment | IShares IBoxx vs. SPDR Bloomberg High | IShares IBoxx vs. iShares TIPS Bond | IShares IBoxx vs. iShares 20 Year |
| Schwab Strategic vs. VanEck Vectors Moodys | Schwab Strategic vs. BondBloxx ETF Trust | Schwab Strategic vs. Vanguard ESG Corporate | Schwab Strategic vs. Vanguard Intermediate Term Corporate |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |