Correlation Between Vanguard Total and Schwab Intermediate
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Schwab Intermediate 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 Vanguard Total and Schwab Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Stock and Schwab Intermediate Term Treasury, you can compare the effects of market volatilities on Vanguard Total and Schwab Intermediate 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 Vanguard Total with a short position of Schwab Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Schwab Intermediate.
Diversification Opportunities for Vanguard Total and Schwab Intermediate
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Schwab is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Schwab Intermediate Term Treas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Intermediate and Vanguard Total 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 Vanguard Total Stock are associated (or correlated) with Schwab Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Intermediate has no effect on the direction of Vanguard Total i.e., Vanguard Total and Schwab Intermediate go up and down completely randomly.
Pair Corralation between Vanguard Total and Schwab Intermediate
Considering the 90-day investment horizon Vanguard Total Stock is expected to generate 2.21 times more return on investment than Schwab Intermediate. However, Vanguard Total is 2.21 times more volatile than Schwab Intermediate Term Treasury. It trades about 0.12 of its potential returns per unit of risk. Schwab Intermediate Term Treasury is currently generating about 0.04 per unit of risk. If you would invest 18,550 in Vanguard Total Stock on September 12, 2024 and sell it today you would earn a total of 11,389 from holding Vanguard Total Stock or generate 61.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Total Stock vs. Schwab Intermediate Term Treas
Performance |
| Timeline |
| Vanguard Total Stock |
| Schwab Intermediate |
Vanguard Total and Schwab Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Schwab Intermediate
The main advantage of trading using opposite Vanguard Total and Schwab Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Schwab Intermediate 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 Intermediate will offset losses from the drop in Schwab Intermediate's long position.| Vanguard Total vs. Vanguard SP 500 | Vanguard Total vs. Vanguard Real Estate | Vanguard Total vs. Vanguard Total Bond | Vanguard Total vs. Vanguard High Dividend |
| Schwab Intermediate vs. Schwab Short Term Treasury | Schwab Intermediate vs. Schwab International Small Cap | Schwab Intermediate vs. Schwab TIPS ETF | Schwab Intermediate vs. Schwab Aggregate Bond |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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