Correlation Between Schwab Aggregate and ClearShares Ultra

Can any of the company-specific risk be diversified away by investing in both Schwab Aggregate and ClearShares Ultra 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 ClearShares Ultra 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 ClearShares Ultra Short Maturity, you can compare the effects of market volatilities on Schwab Aggregate and ClearShares Ultra 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 ClearShares Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Aggregate and ClearShares Ultra.

Diversification Opportunities for Schwab Aggregate and ClearShares Ultra

0.91

Correlation Coefficient

Schwab Aggregate  ClearShares Ultra

Almost no diversification

The 3 months correlation between Schwab and ClearShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Aggregate Bond and ClearShares Ultra Short Maturi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearShares Ultra Short 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 ClearShares Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearShares Ultra Short has no effect on the direction of Schwab Aggregate i.e., Schwab Aggregate and ClearShares Ultra go up and down completely randomly.

Pair Corralation between Schwab Aggregate and ClearShares Ultra

Given the investment horizon of 90 days Schwab Aggregate Bond is expected to generate 16.86 times more return on investment than ClearShares Ultra. However, Schwab Aggregate is 16.86 times more volatile than ClearShares Ultra Short Maturity. It trades about 0.14 of its potential returns per unit of risk. ClearShares Ultra Short Maturity is currently generating about 1.01 per unit of risk. If you would invest  2,257  in Schwab Aggregate Bond on December 30, 2024 and sell it today you would earn a total of  56.00  from holding Schwab Aggregate Bond or generate 2.48% return on investment over 90 days.

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

Schwab Aggregate Bond  vs.  ClearShares Ultra Short Maturi

Schwab Aggregate Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Aggregate Bond are ranked lower than 10 (%) 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.

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.

Pair Trading with Schwab Aggregate and ClearShares Ultra

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

The idea behind Schwab Aggregate Bond and ClearShares Ultra Short Maturity 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.