Correlation Between IShares Broad and Schwab 5
Can any of the company-specific risk be diversified away by investing in both IShares Broad and Schwab 5 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 IShares Broad and Schwab 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Broad USD and Schwab 5 10 Year, you can compare the effects of market volatilities on IShares Broad and Schwab 5 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 IShares Broad with a short position of Schwab 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Broad and Schwab 5.
Diversification Opportunities for IShares Broad and Schwab 5
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Schwab is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Broad USD and Schwab 5 10 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab 5 10 and IShares Broad 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 iShares Broad USD are associated (or correlated) with Schwab 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab 5 10 has no effect on the direction of IShares Broad i.e., IShares Broad and Schwab 5 go up and down completely randomly.
Pair Corralation between IShares Broad and Schwab 5
Given the investment horizon of 90 days IShares Broad is expected to generate 1.4 times less return on investment than Schwab 5. But when comparing it to its historical volatility, iShares Broad USD is 1.03 times less risky than Schwab 5. It trades about 0.06 of its potential returns per unit of risk. Schwab 5 10 Year is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,901 in Schwab 5 10 Year on November 19, 2024 and sell it today you would earn a total of 326.00 from holding Schwab 5 10 Year or generate 17.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Broad USD vs. Schwab 5 10 Year
Performance |
| Timeline |
| iShares Broad USD |
| Schwab 5 10 |
IShares Broad and Schwab 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Broad and Schwab 5
The main advantage of trading using opposite IShares Broad and Schwab 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Broad position performs unexpectedly, Schwab 5 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 5 will offset losses from the drop in Schwab 5's long position.| IShares Broad vs. iShares 5 10 Year | IShares Broad vs. iShares Broad USD | IShares Broad vs. iShares 1 5 Year | IShares Broad vs. iShares 0 5 Year |
| Schwab 5 vs. Schwab 1 5 Year | Schwab 5 vs. Schwab Long Term Treasury | Schwab 5 vs. Schwab Intermediate Term Treasury | Schwab 5 vs. Schwab Short Term Treasury |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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