Correlation Between IShares 3 and Schwab Intermediate
Can any of the company-specific risk be diversified away by investing in both IShares 3 and Schwab Intermediate 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 3 and Schwab Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares 3 7 Year and Schwab Intermediate Term Treasury, you can compare the effects of market volatilities on IShares 3 and Schwab Intermediate 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 3 with a short position of Schwab Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 3 and Schwab Intermediate.
Diversification Opportunities for IShares 3 and Schwab Intermediate
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Schwab is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares 3 7 Year and Schwab Intermediate Term Treas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Intermediate and IShares 3 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 3 7 Year are associated (or correlated) with Schwab Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Intermediate has no effect on the direction of IShares 3 i.e., IShares 3 and Schwab Intermediate go up and down completely randomly.
Pair Corralation between IShares 3 and Schwab Intermediate
Considering the 90-day investment horizon iShares 3 7 Year is expected to under-perform the Schwab Intermediate. But the etf apears to be less risky and, when comparing its historical volatility, iShares 3 7 Year is 1.21 times less risky than Schwab Intermediate. The etf trades about -0.15 of its potential returns per unit of risk. The Schwab Intermediate Term Treasury is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 2,461 in Schwab Intermediate Term Treasury on August 24, 2024 and sell it today you would lose (18.00) from holding Schwab Intermediate Term Treasury or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares 3 7 Year vs. Schwab Intermediate Term Treas
Performance |
| Timeline |
| iShares 3 7 |
| Schwab Intermediate |
IShares 3 and Schwab Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares 3 and Schwab Intermediate
The main advantage of trading using opposite IShares 3 and Schwab Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 3 position performs unexpectedly, Schwab Intermediate 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 Intermediate will offset losses from the drop in Schwab Intermediate's long position.| IShares 3 vs. iShares 10 20 Year | IShares 3 vs. iShares 7 10 Year | IShares 3 vs. iShares 1 3 Year | IShares 3 vs. iShares MBS ETF |
| Schwab Intermediate vs. Schwab Short Term Treasury | Schwab Intermediate vs. Schwab International Small Cap | Schwab Intermediate vs. Schwab TIPS ETF | Schwab Intermediate vs. Schwab Aggregate Bond |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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