Correlation Between Schwab Treasury and Prudential Muni
Can any of the company-specific risk be diversified away by investing in both Schwab Treasury and Prudential Muni 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 Treasury and Prudential Muni into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Treasury Money and Prudential Muni High, you can compare the effects of market volatilities on Schwab Treasury and Prudential Muni 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 Treasury with a short position of Prudential Muni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Treasury and Prudential Muni.
Diversification Opportunities for Schwab Treasury and Prudential Muni
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Schwab and Prudential is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Treasury Money and Prudential Muni High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Muni High and Schwab Treasury 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 Treasury Money are associated (or correlated) with Prudential Muni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Muni High has no effect on the direction of Schwab Treasury i.e., Schwab Treasury and Prudential Muni go up and down completely randomly.
Pair Corralation between Schwab Treasury and Prudential Muni
Assuming the 90 days horizon Schwab Treasury Money is expected to generate 0.43 times more return on investment than Prudential Muni. However, Schwab Treasury Money is 2.33 times less risky than Prudential Muni. It trades about 0.13 of its potential returns per unit of risk. Prudential Muni High is currently generating about 0.03 per unit of risk. If you would invest 99.00 in Schwab Treasury Money on September 12, 2024 and sell it today you would earn a total of 1.00 from holding Schwab Treasury Money or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab Treasury Money vs. Prudential Muni High
Performance |
| Timeline |
| Schwab Treasury Money |
| Prudential Muni High |
Schwab Treasury and Prudential Muni Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Treasury and Prudential Muni
The main advantage of trading using opposite Schwab Treasury and Prudential Muni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Treasury position performs unexpectedly, Prudential Muni 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 Prudential Muni will offset losses from the drop in Prudential Muni's long position.| Schwab Treasury vs. Invesco Technology Fund | Schwab Treasury vs. Fidelity Advisor Technology | Schwab Treasury vs. Goldman Sachs Technology | Schwab Treasury vs. Hennessy Technology Fund |
| Prudential Muni vs. Elfun Government Money | Prudential Muni vs. Chestnut Street Exchange | Prudential Muni vs. Schwab Treasury Money | Prudential Muni vs. Putnam Money Market |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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