Correlation Between ClearShares Ultra and Schwab Aggregate

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

By analyzing existing cross correlation between ClearShares Ultra Short Maturity and Schwab Aggregate Bond, you can compare the effects of market volatilities on ClearShares Ultra and Schwab Aggregate 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 ClearShares Ultra with a short position of Schwab Aggregate. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearShares Ultra and Schwab Aggregate.

Diversification Opportunities for ClearShares Ultra and Schwab Aggregate

0.33

Correlation Coefficient

ClearShares Ultra  Schwab Aggregate

Weak diversification

The 3 months correlation between ClearShares and Schwab is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding ClearShares Ultra Short Maturi and Schwab Aggregate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Aggregate Bond and ClearShares Ultra 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 ClearShares Ultra Short Maturity are associated (or correlated) with Schwab Aggregate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Aggregate Bond has no effect on the direction of ClearShares Ultra i.e., ClearShares Ultra and Schwab Aggregate go up and down completely randomly.

Pair Corralation between ClearShares Ultra and Schwab Aggregate

Given the investment horizon of 90 days ClearShares Ultra Short Maturity is expected to generate 0.06 times more return on investment than Schwab Aggregate. However, ClearShares Ultra Short Maturity is 17.55 times less risky than Schwab Aggregate. It trades about 1.01 of its potential returns per unit of risk. Schwab Aggregate Bond is currently generating about 0.05 per unit of risk. If you would invest  9,906  in ClearShares Ultra Short Maturity on December 4, 2024 and sell it today you would earn a total of  107.00  from holding ClearShares Ultra Short Maturity or generate 1.08% return on investment over 90 days.

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

ClearShares Ultra Short Maturi  vs.  Schwab Aggregate Bond

ClearShares Ultra Short

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in ClearShares Ultra Short Maturity are ranked lower than 79 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, ClearShares Ultra is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Schwab Aggregate Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Aggregate Bond are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Schwab Aggregate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ClearShares Ultra and Schwab Aggregate

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

The idea behind ClearShares Ultra Short Maturity and Schwab Aggregate Bond 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.