Correlation Between Managed Account and Schwab Strategic

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

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

Diversification Opportunities for Managed Account and Schwab Strategic

-0.84

Correlation Coefficient

Managed Account  Schwab Strategic

Pay attention - limited upside

The 3 months correlation between Managed and Schwab is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Managed Account Series and Schwab Strategic Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Strategic Trust and Managed Account 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 Managed Account Series are associated (or correlated) with Schwab Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Strategic Trust has no effect on the direction of Managed Account i.e., Managed Account and Schwab Strategic go up and down completely randomly.

Pair Corralation between Managed Account and Schwab Strategic

Assuming the 90 days horizon Managed Account Series is expected to generate 0.05 times more return on investment than Schwab Strategic. However, Managed Account Series is 19.26 times less risky than Schwab Strategic. It trades about 0.21 of its potential returns per unit of risk. Schwab Strategic Trust is currently generating about -0.08 per unit of risk. If you would invest  875.00  in Managed Account Series on December 26, 2024 and sell it today you would earn a total of  23.00  from holding Managed Account Series or generate 2.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Managed Account Series  vs.  Schwab Strategic Trust

Managed Account Series

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Managed Account Series are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Managed Account is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Schwab Strategic Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Schwab Strategic Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with Managed Account and Schwab Strategic

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

The idea behind Managed Account Series and Schwab Strategic 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 Global Correlations module to find global opportunities by holding instruments from different markets.