Correlation Between SPDR Bloomberg and Schwab Intermediate

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

By analyzing existing cross correlation between SPDR Bloomberg Barclays and Schwab Intermediate Term Treasury, you can compare the effects of market volatilities on SPDR Bloomberg 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 SPDR Bloomberg with a short position of Schwab Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Bloomberg and Schwab Intermediate.

Diversification Opportunities for SPDR Bloomberg and Schwab Intermediate

0.97

Correlation Coefficient

SPDR Bloomberg  Schwab Intermediate

Almost no diversification

The 3 months correlation between SPDR and Schwab is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Bloomberg Barclays 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 SPDR Bloomberg 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 SPDR Bloomberg Barclays 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 SPDR Bloomberg i.e., SPDR Bloomberg and Schwab Intermediate go up and down completely randomly.

Pair Corralation between SPDR Bloomberg and Schwab Intermediate

Considering the 90-day investment horizon SPDR Bloomberg Barclays is expected to generate 472.79 times more return on investment than Schwab Intermediate. However, SPDR Bloomberg is 472.79 times more volatile than Schwab Intermediate Term Treasury. It trades about 0.13 of its potential returns per unit of risk. Schwab Intermediate Term Treasury is currently generating about 0.16 per unit of risk. If you would invest  2,762  in SPDR Bloomberg Barclays on December 27, 2024 and sell it today you would earn a total of  100,738  from holding SPDR Bloomberg Barclays or generate 3647.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

SPDR Bloomberg Barclays  vs.  Schwab Intermediate Term Treas

SPDR Bloomberg Barclays

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Bloomberg Barclays are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, SPDR Bloomberg exhibited solid returns over the last few months and may actually be approaching a breakup point.

Schwab Intermediate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Intermediate Term Treasury are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical indicators, Schwab Intermediate is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SPDR Bloomberg and Schwab Intermediate

The main advantage of trading using opposite SPDR Bloomberg and Schwab Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Bloomberg 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.

The idea behind SPDR Bloomberg Barclays and Schwab Intermediate Term Treasury 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.