Correlation Between IShares Russell and Schwab Intermediate

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both IShares Russell 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 IShares Russell and Schwab Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Russell 1000 and Schwab Intermediate Term Treasury, you can compare the effects of market volatilities on IShares Russell 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 IShares Russell with a short position of Schwab Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and Schwab Intermediate.

Diversification Opportunities for IShares Russell and Schwab Intermediate

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between IShares and Schwab is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 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 IShares Russell 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 Russell 1000 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 IShares Russell i.e., IShares Russell and Schwab Intermediate go up and down completely randomly.

Pair Corralation between IShares Russell and Schwab Intermediate

Considering the 90-day investment horizon iShares Russell 1000 is expected to generate 2.82 times more return on investment than Schwab Intermediate. However, IShares Russell is 2.82 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  22,084  in iShares Russell 1000 on October 4, 2024 and sell it today you would earn a total of  17,982  from holding iShares Russell 1000 or generate 81.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

iShares Russell 1000  vs.  Schwab Intermediate Term Treas

 Performance 
       Timeline  
iShares Russell 1000 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in iShares Russell 1000 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, IShares Russell may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Schwab Intermediate 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Schwab Intermediate Term Treasury has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

IShares Russell and Schwab Intermediate Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares Russell and Schwab Intermediate

The main advantage of trading using opposite IShares Russell and Schwab Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell 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 iShares Russell 1000 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.

Other Complementary Tools

Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Equity Valuation
Check real value of public entities based on technical and fundamental data
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance