Correlation Between Schwab Municipal and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Schwab Municipal and Vanguard Total 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 Municipal and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Municipal Bond and Vanguard Total Corporate, you can compare the effects of market volatilities on Schwab Municipal and Vanguard Total 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 Municipal with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Municipal and Vanguard Total.
Diversification Opportunities for Schwab Municipal and Vanguard Total
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Schwab and Vanguard is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Municipal Bond and Vanguard Total Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Corporate and Schwab Municipal 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 Municipal Bond are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Corporate has no effect on the direction of Schwab Municipal i.e., Schwab Municipal and Vanguard Total go up and down completely randomly.
Pair Corralation between Schwab Municipal and Vanguard Total
Given the investment horizon of 90 days Schwab Municipal is expected to generate 1.05 times less return on investment than Vanguard Total. But when comparing it to its historical volatility, Schwab Municipal Bond is 1.32 times less risky than Vanguard Total. It trades about 0.13 of its potential returns per unit of risk. Vanguard Total Corporate is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 7,433 in Vanguard Total Corporate on September 1, 2024 and sell it today you would earn a total of 347.00 from holding Vanguard Total Corporate or generate 4.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Schwab Municipal Bond vs. Vanguard Total Corporate
Performance |
| Timeline |
| Schwab Municipal Bond |
| Vanguard Total Corporate |
Schwab Municipal and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Municipal and Vanguard Total
The main advantage of trading using opposite Schwab Municipal and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Municipal position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.| 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 |
| Vanguard Total vs. Vanguard Total World | Vanguard Total vs. Vanguard Long Term Corporate | Vanguard Total vs. Vanguard Emerging Markets | Vanguard Total vs. Vanguard Mortgage Backed Securities |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| 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 | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |