Correlation Between Schwab Strategic and GraniteShares HIPS
Can any of the company-specific risk be diversified away by investing in both Schwab Strategic and GraniteShares HIPS 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 Strategic and GraniteShares HIPS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Strategic Trust and GraniteShares HIPS High, you can compare the effects of market volatilities on Schwab Strategic and GraniteShares HIPS 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 Strategic with a short position of GraniteShares HIPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Strategic and GraniteShares HIPS.
Diversification Opportunities for Schwab Strategic and GraniteShares HIPS
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Schwab and GraniteShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Strategic Trust and GraniteShares HIPS High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares HIPS High and Schwab Strategic 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 Strategic Trust are associated (or correlated) with GraniteShares HIPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares HIPS High has no effect on the direction of Schwab Strategic i.e., Schwab Strategic and GraniteShares HIPS go up and down completely randomly.
Pair Corralation between Schwab Strategic and GraniteShares HIPS
Given the investment horizon of 90 days Schwab Strategic is expected to generate 1.4 times less return on investment than GraniteShares HIPS. But when comparing it to its historical volatility, Schwab Strategic Trust is 2.1 times less risky than GraniteShares HIPS. It trades about 0.19 of its potential returns per unit of risk. GraniteShares HIPS High is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,096 in GraniteShares HIPS High on August 27, 2024 and sell it today you would earn a total of 220.00 from holding GraniteShares HIPS High or generate 20.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab Strategic Trust vs. GraniteShares HIPS High
Performance |
| Timeline |
| Schwab Strategic Trust |
| GraniteShares HIPS High |
Schwab Strategic and GraniteShares HIPS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Strategic and GraniteShares HIPS
The main advantage of trading using opposite Schwab Strategic and GraniteShares HIPS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Strategic position performs unexpectedly, GraniteShares HIPS 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 GraniteShares HIPS will offset losses from the drop in GraniteShares HIPS's long position.| Schwab Strategic vs. First Trust Senior | Schwab Strategic vs. First Trust Low | Schwab Strategic vs. First Trust Enhanced | Schwab Strategic vs. First Trust TCW |
| GraniteShares HIPS vs. Amplify BlackSwan Growth | GraniteShares HIPS vs. RPAR Risk Parity | GraniteShares HIPS vs. WisdomTree International Efficient | GraniteShares HIPS vs. iMGP DBi Managed |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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