Correlation Between Schwab Intermediate and Schwab 1
Can any of the company-specific risk be diversified away by investing in both Schwab Intermediate and Schwab 1 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 Schwab Intermediate and Schwab 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Intermediate Term Treasury and Schwab 1 5 Year, you can compare the effects of market volatilities on Schwab Intermediate and Schwab 1 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 Schwab Intermediate with a short position of Schwab 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Intermediate and Schwab 1.
Diversification Opportunities for Schwab Intermediate and Schwab 1
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Schwab and Schwab is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Intermediate Term Treas and Schwab 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab 1 5 and Schwab 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 Schwab Intermediate Term Treasury are associated (or correlated) with Schwab 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab 1 5 has no effect on the direction of Schwab Intermediate i.e., Schwab Intermediate and Schwab 1 go up and down completely randomly.
Pair Corralation between Schwab Intermediate and Schwab 1
Given the investment horizon of 90 days Schwab Intermediate is expected to generate 1.11 times less return on investment than Schwab 1. In addition to that, Schwab Intermediate is 2.17 times more volatile than Schwab 1 5 Year. It trades about 0.11 of its total potential returns per unit of risk. Schwab 1 5 Year is currently generating about 0.26 per unit of volatility. If you would invest 2,438 in Schwab 1 5 Year on September 2, 2024 and sell it today you would earn a total of 19.00 from holding Schwab 1 5 Year or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab Intermediate Term Treas vs. Schwab 1 5 Year
Performance |
| Timeline |
| Schwab Intermediate |
| Schwab 1 5 |
Schwab Intermediate and Schwab 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Intermediate and Schwab 1
The main advantage of trading using opposite Schwab Intermediate and Schwab 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Intermediate position performs unexpectedly, Schwab 1 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 1 will offset losses from the drop in Schwab 1's long position.| 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 |
| Schwab 1 vs. Schwab 5 10 Year | Schwab 1 vs. Schwab Long Term Treasury | Schwab 1 vs. Schwab Short Term Treasury | Schwab 1 vs. Schwab Intermediate 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |