Correlation Between Schwab Treasury and The Bond
Can any of the company-specific risk be diversified away by investing in both Schwab Treasury and The Bond 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 The Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Treasury Inflation and The Bond Fund, you can compare the effects of market volatilities on Schwab Treasury and The Bond 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 The Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Treasury and The Bond.
Diversification Opportunities for Schwab Treasury and The Bond
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Schwab and The is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Treasury Inflation and The Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bond Fund 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 Inflation are associated (or correlated) with The Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bond Fund has no effect on the direction of Schwab Treasury i.e., Schwab Treasury and The Bond go up and down completely randomly.
Pair Corralation between Schwab Treasury and The Bond
Assuming the 90 days horizon Schwab Treasury is expected to generate 1.18 times less return on investment than The Bond. But when comparing it to its historical volatility, Schwab Treasury Inflation is 1.24 times less risky than The Bond. It trades about 0.09 of its potential returns per unit of risk. The Bond Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,710 in The Bond Fund on August 25, 2024 and sell it today you would earn a total of 63.00 from holding The Bond Fund or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab Treasury Inflation vs. The Bond Fund
Performance |
| Timeline |
| Schwab Treasury Inflation |
| Bond Fund |
Schwab Treasury and The Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Treasury and The Bond
The main advantage of trading using opposite Schwab Treasury and The Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Treasury position performs unexpectedly, The Bond 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 The Bond will offset losses from the drop in The Bond's long position.| Schwab Treasury vs. Vanguard Inflation Protected Securities | Schwab Treasury vs. American Funds Inflation | Schwab Treasury vs. American Funds Inflation | Schwab Treasury vs. American Funds Inflation |
| The Bond vs. Lord Abbett Inflation | The Bond vs. Western Asset Inflation | The Bond vs. Schwab Treasury Inflation | The Bond vs. Blackrock Inflation Protected |
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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