Correlation Between Quadratic Interest and US Treasury
Can any of the company-specific risk be diversified away by investing in both Quadratic Interest and US Treasury 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 Quadratic Interest and US Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quadratic Interest Rate and US Treasury 20, you can compare the effects of market volatilities on Quadratic Interest and US Treasury 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 Quadratic Interest with a short position of US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quadratic Interest and US Treasury.
Diversification Opportunities for Quadratic Interest and US Treasury
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Quadratic and UTWY is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Quadratic Interest Rate and US Treasury 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 20 and Quadratic Interest 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 Quadratic Interest Rate are associated (or correlated) with US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 20 has no effect on the direction of Quadratic Interest i.e., Quadratic Interest and US Treasury go up and down completely randomly.
Pair Corralation between Quadratic Interest and US Treasury
Given the investment horizon of 90 days Quadratic Interest is expected to generate 212.0 times less return on investment than US Treasury. But when comparing it to its historical volatility, Quadratic Interest Rate is 1.33 times less risky than US Treasury. It trades about 0.0 of its potential returns per unit of risk. US Treasury 20 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,343 in US Treasury 20 on August 24, 2024 and sell it today you would earn a total of 102.00 from holding US Treasury 20 or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quadratic Interest Rate vs. US Treasury 20
Performance |
| Timeline |
| Quadratic Interest Rate |
| US Treasury 20 |
Quadratic Interest and US Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quadratic Interest and US Treasury
The main advantage of trading using opposite Quadratic Interest and US Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quadratic Interest position performs unexpectedly, US Treasury 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 US Treasury will offset losses from the drop in US Treasury's long position.| Quadratic Interest vs. Schwab Intermediate Term Treasury | Quadratic Interest vs. Schwab Aggregate Bond | Quadratic Interest vs. Schwab International Equity | Quadratic Interest vs. Schwab Emerging Markets |
| US Treasury vs. Quadratic Interest Rate | US Treasury vs. AGFiQ Market Neutral | US Treasury vs. Simplify Interest Rate | US Treasury vs. Invesco Investment Grade |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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