Correlation Between TCW ETF and US Treasury
Can any of the company-specific risk be diversified away by investing in both TCW ETF 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 TCW ETF and US Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TCW ETF Trust and US Treasury 20, you can compare the effects of market volatilities on TCW ETF 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 TCW ETF with a short position of US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of TCW ETF and US Treasury.
Diversification Opportunities for TCW ETF and US Treasury
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between TCW and UTWY is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding TCW ETF Trust 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 TCW ETF 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 TCW ETF Trust 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 TCW ETF i.e., TCW ETF and US Treasury go up and down completely randomly.
Pair Corralation between TCW ETF and US Treasury
Given the investment horizon of 90 days TCW ETF Trust is expected to generate 1.56 times more return on investment than US Treasury. However, TCW ETF is 1.56 times more volatile than US Treasury 20. It trades about 0.05 of its potential returns per unit of risk. US Treasury 20 is currently generating about 0.05 per unit of risk. If you would invest 6,410 in TCW ETF Trust on August 29, 2024 and sell it today you would earn a total of 380.00 from holding TCW ETF Trust or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TCW ETF Trust vs. US Treasury 20
Performance |
| Timeline |
| TCW ETF Trust |
| US Treasury 20 |
TCW ETF and US Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TCW ETF and US Treasury
The main advantage of trading using opposite TCW ETF and US Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TCW ETF 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.| TCW ETF vs. ProShares Supply Chain | TCW ETF vs. JPMorgan Climate Change | TCW ETF vs. Rbb Fund | TCW ETF vs. Simplify Propel Opportunities |
| US Treasury vs. US Treasury 30 | US Treasury vs. US Treasury 5 | US Treasury vs. US Treasury 7 | US Treasury vs. US Treasury 3 |
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 Stocks Directory module to find actively traded stocks across global markets.
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