Correlation Between Schwab Long and BondBloxx ETF

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

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

Diversification Opportunities for Schwab Long and BondBloxx ETF

0.83

Correlation Coefficient

Schwab Long  BondBloxx ETF

Very poor diversification

The 3 months correlation between Schwab and BondBloxx is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Long Term Treasury and BondBloxx ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BondBloxx ETF Trust and Schwab Long 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 Long Term Treasury are associated (or correlated) with BondBloxx ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BondBloxx ETF Trust has no effect on the direction of Schwab Long i.e., Schwab Long and BondBloxx ETF go up and down completely randomly.

Pair Corralation between Schwab Long and BondBloxx ETF

Given the investment horizon of 90 days Schwab Long Term Treasury is expected to generate 2.38 times more return on investment than BondBloxx ETF. However, Schwab Long is 2.38 times more volatile than BondBloxx ETF Trust. It trades about 0.08 of its potential returns per unit of risk. BondBloxx ETF Trust is currently generating about 0.11 per unit of risk. If you would invest  3,137  in Schwab Long Term Treasury on December 30, 2024 and sell it today you would earn a total of  114.00  from holding Schwab Long Term Treasury or generate 3.63% return on investment over 90 days.

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

Schwab Long Term Treasury  vs.  BondBloxx ETF Trust

Schwab Long Term

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Long Term Treasury are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical indicators, Schwab Long is not utilizing all of its potentials. The new stock price agitation, may contribute to short-term losses for the retail investors.

BondBloxx ETF Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BondBloxx ETF Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, BondBloxx ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Schwab Long and BondBloxx ETF

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

The idea behind Schwab Long Term Treasury and BondBloxx 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.