Correlation Between Schwab Aggregate and Quadratic Interest

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

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

Diversification Opportunities for Schwab Aggregate and Quadratic Interest

0.78

Correlation Coefficient

Schwab Aggregate  Quadratic Interest

Poor diversification

The 3 months correlation between Schwab and Quadratic is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Aggregate Bond and Quadratic Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quadratic Interest Rate and Schwab Aggregate 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 Aggregate Bond are associated (or correlated) with Quadratic Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quadratic Interest Rate has no effect on the direction of Schwab Aggregate i.e., Schwab Aggregate and Quadratic Interest go up and down completely randomly.

Pair Corralation between Schwab Aggregate and Quadratic Interest

Given the investment horizon of 90 days Schwab Aggregate Bond is expected to generate 1.0 times more return on investment than Quadratic Interest. However, Schwab Aggregate is 1.0 times more volatile than Quadratic Interest Rate. It trades about 0.09 of its potential returns per unit of risk. Quadratic Interest Rate is currently generating about -0.26 per unit of risk. If you would invest  2,286  in Schwab Aggregate Bond on September 19, 2024 and sell it today you would earn a total of  13.00  from holding Schwab Aggregate Bond or generate 0.57% return on investment over 90 days.

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

Schwab Aggregate Bond  vs.  Quadratic Interest Rate

Schwab Aggregate Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab Aggregate Bond has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Quadratic Interest Rate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quadratic Interest Rate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with Schwab Aggregate and Quadratic Interest

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

The idea behind Schwab Aggregate Bond and Quadratic Interest Rate 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.