Correlation Between SPDR Barclays and Schwab Short
Can any of the company-specific risk be diversified away by investing in both SPDR Barclays and Schwab Short 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 SPDR Barclays and Schwab Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Barclays Short and Schwab Short Term Treasury, you can compare the effects of market volatilities on SPDR Barclays and Schwab Short 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 SPDR Barclays with a short position of Schwab Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Barclays and Schwab Short.
Diversification Opportunities for SPDR Barclays and Schwab Short
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and Schwab is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Barclays Short and Schwab Short Term Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Short Term and SPDR Barclays 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 SPDR Barclays Short are associated (or correlated) with Schwab Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Short Term has no effect on the direction of SPDR Barclays i.e., SPDR Barclays and Schwab Short go up and down completely randomly.
Pair Corralation between SPDR Barclays and Schwab Short
Given the investment horizon of 90 days SPDR Barclays is expected to generate 2.35 times less return on investment than Schwab Short. But when comparing it to its historical volatility, SPDR Barclays Short is 1.06 times less risky than Schwab Short. It trades about 0.02 of its potential returns per unit of risk. Schwab Short Term Treasury is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,418 in Schwab Short Term Treasury on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Schwab Short Term Treasury or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Barclays Short vs. Schwab Short Term Treasury
Performance |
| Timeline |
| SPDR Barclays Short |
| Schwab Short Term |
SPDR Barclays and Schwab Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Barclays and Schwab Short
The main advantage of trading using opposite SPDR Barclays and Schwab Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Barclays position performs unexpectedly, Schwab Short 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 Short will offset losses from the drop in Schwab Short's long position.| SPDR Barclays vs. SPDR Barclays Long | SPDR Barclays vs. SPDR Portfolio Intermediate | SPDR Barclays vs. SPDR Barclays Short | SPDR Barclays vs. SPDR Barclays Intermediate |
| Schwab Short vs. Schwab Intermediate Term Treasury | Schwab Short vs. Schwab Aggregate Bond | Schwab Short vs. Schwab TIPS ETF | Schwab Short vs. Schwab International Small Cap |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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