Correlation Between Schwab Treasury and Small Cap
Can any of the company-specific risk be diversified away by investing in both Schwab Treasury and Small Cap 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 Small Cap 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 Small Cap Index, you can compare the effects of market volatilities on Schwab Treasury and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Treasury and Small Cap.
Diversification Opportunities for Schwab Treasury and Small Cap
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Schwab and Small is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Treasury Money and Small Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Index 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Index has no effect on the direction of Schwab Treasury i.e., Schwab Treasury and Small Cap go up and down completely randomly.
Pair Corralation between Schwab Treasury and Small Cap
If you would invest 100.00 in Schwab Treasury Money on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Schwab Treasury Money or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Schwab Treasury Money vs. Small Cap Index
Performance |
| Timeline |
| Schwab Treasury Money |
| Small Cap Index |
Schwab Treasury and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Treasury and Small Cap
The main advantage of trading using opposite Schwab Treasury and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Treasury position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Schwab Treasury vs. Jpmorgan Diversified Fund | Schwab Treasury vs. Guggenheim Diversified Income | Schwab Treasury vs. Prudential Core Conservative | Schwab Treasury vs. Elfun Diversified Fund |
| Small Cap vs. Financials Ultrasector Profund | Small Cap vs. Icon Financial Fund | Small Cap vs. 1919 Financial Services | Small Cap vs. Angel Oak Financial |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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