Correlation Between Schwab Fundamental and NuShares ETF

Can any of the company-specific risk be diversified away by investing in both Schwab Fundamental and NuShares ETF 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 Fundamental and NuShares ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Schwab Fundamental Emerging and NuShares ETF Trust, you can compare the effects of market volatilities on Schwab Fundamental and NuShares ETF 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 Fundamental with a short position of NuShares ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Fundamental and NuShares ETF.

Diversification Opportunities for Schwab Fundamental and NuShares ETF

0.96

Correlation Coefficient

Schwab Fundamental  NuShares ETF

Almost no diversification

The 3 months correlation between Schwab and NuShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Fundamental Emerging and NuShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuShares ETF Trust and Schwab Fundamental 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 Fundamental Emerging are associated (or correlated) with NuShares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuShares ETF Trust has no effect on the direction of Schwab Fundamental i.e., Schwab Fundamental and NuShares ETF go up and down completely randomly.

Pair Corralation between Schwab Fundamental and NuShares ETF

Given the investment horizon of 90 days Schwab Fundamental Emerging is expected to under-perform the NuShares ETF. In addition to that, Schwab Fundamental is 1.09 times more volatile than NuShares ETF Trust. It trades about -0.12 of its total potential returns per unit of risk. NuShares ETF Trust is currently generating about -0.11 per unit of volatility. If you would invest  3,098  in NuShares ETF Trust on October 12, 2024 and sell it today you would lose (199.00) from holding NuShares ETF Trust or give up 6.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Schwab Fundamental Emerging  vs.  NuShares ETF Trust

Schwab Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab Fundamental Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

NuShares ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NuShares ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Schwab Fundamental and NuShares ETF

The main advantage of trading using opposite Schwab Fundamental and NuShares ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Fundamental position performs unexpectedly, NuShares ETF 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 NuShares ETF will offset losses from the drop in NuShares ETF's long position.

The idea behind Schwab Fundamental Emerging and NuShares ETF Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.