Correlation Between Schwab International and Schwab Treasury
Can any of the company-specific risk be diversified away by investing in both Schwab International and Schwab 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 Schwab International and Schwab Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab International Index and Schwab Treasury Inflation, you can compare the effects of market volatilities on Schwab International and Schwab 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 Schwab International with a short position of Schwab Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab International and Schwab Treasury.
Diversification Opportunities for Schwab International and Schwab Treasury
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Schwab and Schwab is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Schwab International Index and Schwab Treasury Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Treasury Inflation and Schwab International 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 International Index are associated (or correlated) with Schwab Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Treasury Inflation has no effect on the direction of Schwab International i.e., Schwab International and Schwab Treasury go up and down completely randomly.
Pair Corralation between Schwab International and Schwab Treasury
Assuming the 90 days horizon Schwab International Index is expected to generate 2.42 times more return on investment than Schwab Treasury. However, Schwab International is 2.42 times more volatile than Schwab Treasury Inflation. It trades about 0.04 of its potential returns per unit of risk. Schwab Treasury Inflation is currently generating about 0.02 per unit of risk. If you would invest 2,113 in Schwab International Index on August 26, 2024 and sell it today you would earn a total of 243.00 from holding Schwab International Index or generate 11.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab International Index vs. Schwab Treasury Inflation
Performance |
| Timeline |
| Schwab International |
| Schwab Treasury Inflation |
Schwab International and Schwab Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab International and Schwab Treasury
The main advantage of trading using opposite Schwab International and Schwab Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab International position performs unexpectedly, Schwab 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 Schwab Treasury will offset losses from the drop in Schwab Treasury's long position.| Schwab International vs. Schwab Small Cap Index | Schwab International vs. Schwab Total Stock | Schwab International vs. Schwab Aggregate Bond | Schwab International vs. Schwab Sp 500 |
| Schwab Treasury vs. Tiaa Cref Real Estate | Schwab Treasury vs. Columbia Real Estate | Schwab Treasury vs. Commonwealth Real Estate | Schwab Treasury vs. Forum Real Estate |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |