Correlation Between Schwab Treasury and Pacific Funds
Can any of the company-specific risk be diversified away by investing in both Schwab Treasury and Pacific Funds 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 Pacific Funds 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 Pacific Funds Portfolio, you can compare the effects of market volatilities on Schwab Treasury and Pacific Funds 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 Pacific Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Treasury and Pacific Funds.
Diversification Opportunities for Schwab Treasury and Pacific Funds
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Schwab and Pacific is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Treasury Inflation and Pacific Funds Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Portfolio 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 Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Portfolio has no effect on the direction of Schwab Treasury i.e., Schwab Treasury and Pacific Funds go up and down completely randomly.
Pair Corralation between Schwab Treasury and Pacific Funds
Assuming the 90 days horizon Schwab Treasury is expected to generate 2.69 times less return on investment than Pacific Funds. But when comparing it to its historical volatility, Schwab Treasury Inflation is 3.5 times less risky than Pacific Funds. It trades about 0.27 of its potential returns per unit of risk. Pacific Funds Portfolio is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,382 in Pacific Funds Portfolio on November 3, 2024 and sell it today you would earn a total of 44.00 from holding Pacific Funds Portfolio or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab Treasury Inflation vs. Pacific Funds Portfolio
Performance |
| Timeline |
| Schwab Treasury Inflation |
| Pacific Funds Portfolio |
Schwab Treasury and Pacific Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Treasury and Pacific Funds
The main advantage of trading using opposite Schwab Treasury and Pacific Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Treasury position performs unexpectedly, Pacific Funds 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 Pacific Funds will offset losses from the drop in Pacific Funds' long position.| Schwab Treasury vs. Ultra Short Fixed Income | Schwab Treasury vs. Siit Ultra Short | Schwab Treasury vs. Leader Short Term Bond | Schwab Treasury vs. Oakhurst Short Duration |
| Pacific Funds vs. Investec Emerging Markets | Pacific Funds vs. Angel Oak Multi Strategy | Pacific Funds vs. Federated Emerging Market | Pacific Funds vs. Mid Cap 15x Strategy |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |