Correlation Between VanEck Intermediate and Schwab Municipal
Can any of the company-specific risk be diversified away by investing in both VanEck Intermediate and Schwab Municipal 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 VanEck Intermediate and Schwab Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Intermediate Muni and Schwab Municipal Bond, you can compare the effects of market volatilities on VanEck Intermediate and Schwab Municipal 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 VanEck Intermediate with a short position of Schwab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Intermediate and Schwab Municipal.
Diversification Opportunities for VanEck Intermediate and Schwab Municipal
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VanEck and Schwab is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Intermediate Muni and Schwab Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Municipal Bond and VanEck Intermediate 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 VanEck Intermediate Muni are associated (or correlated) with Schwab Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Municipal Bond has no effect on the direction of VanEck Intermediate i.e., VanEck Intermediate and Schwab Municipal go up and down completely randomly.
Pair Corralation between VanEck Intermediate and Schwab Municipal
Considering the 90-day investment horizon VanEck Intermediate Muni is expected to generate 0.94 times more return on investment than Schwab Municipal. However, VanEck Intermediate Muni is 1.06 times less risky than Schwab Municipal. It trades about 0.12 of its potential returns per unit of risk. Schwab Municipal Bond is currently generating about 0.11 per unit of risk. If you would invest 4,601 in VanEck Intermediate Muni on August 29, 2024 and sell it today you would earn a total of 46.00 from holding VanEck Intermediate Muni or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Intermediate Muni vs. Schwab Municipal Bond
Performance |
| Timeline |
| VanEck Intermediate Muni |
| Schwab Municipal Bond |
VanEck Intermediate and Schwab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Intermediate and Schwab Municipal
The main advantage of trading using opposite VanEck Intermediate and Schwab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Intermediate position performs unexpectedly, Schwab Municipal 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 Municipal will offset losses from the drop in Schwab Municipal's long position.| VanEck Intermediate vs. VanEck Long Muni | VanEck Intermediate vs. VanEck Short Muni | VanEck Intermediate vs. SPDR Nuveen Bloomberg | VanEck Intermediate vs. Invesco National AMT Free |
| Schwab Municipal vs. Vanguard Tax Exempt Bond | Schwab Municipal vs. Vanguard Short Term Tax Exempt | Schwab Municipal vs. PIMCO Intermediate Municipal | Schwab Municipal vs. Schwab Long 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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