Correlation Between Schwab Treasury and Western Asset
Can any of the company-specific risk be diversified away by investing in both Schwab Treasury and Western Asset 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 Western Asset 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 Western Asset Inflation, you can compare the effects of market volatilities on Schwab Treasury and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Treasury and Western Asset.
Diversification Opportunities for Schwab Treasury and Western Asset
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Schwab and WESTERN is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Treasury Inflation and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Inflation has no effect on the direction of Schwab Treasury i.e., Schwab Treasury and Western Asset go up and down completely randomly.
Pair Corralation between Schwab Treasury and Western Asset
Assuming the 90 days horizon Schwab Treasury Inflation is expected to generate 0.86 times more return on investment than Western Asset. However, Schwab Treasury Inflation is 1.17 times less risky than Western Asset. It trades about -0.04 of its potential returns per unit of risk. Western Asset Inflation is currently generating about -0.07 per unit of risk. If you would invest 1,024 in Schwab Treasury Inflation on August 28, 2024 and sell it today you would lose (2.00) from holding Schwab Treasury Inflation or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schwab Treasury Inflation vs. Western Asset Inflation
Performance |
| Timeline |
| Schwab Treasury Inflation |
| Western Asset Inflation |
Schwab Treasury and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Treasury and Western Asset
The main advantage of trading using opposite Schwab Treasury and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Treasury position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Schwab Treasury vs. Chartwell Short Duration | Schwab Treasury vs. Rationalpier 88 Convertible | Schwab Treasury vs. Limited Term Tax | Schwab Treasury vs. Fundvantage Trust |
| Western Asset vs. Invesco Technology Fund | Western Asset vs. Mfs Technology Fund | Western Asset vs. Hennessy Technology Fund | Western Asset vs. Columbia Global Technology |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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