Correlation Between Schwab Strategic and Defiance ETFs

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

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

Diversification Opportunities for Schwab Strategic and Defiance ETFs

0.0

Correlation Coefficient

Schwab Strategic  Defiance ETFs

Pay attention - limited upside

The 3 months correlation between Schwab and Defiance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Strategic Trust and Defiance ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defiance ETFs and Schwab Strategic 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 Strategic Trust are associated (or correlated) with Defiance ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defiance ETFs has no effect on the direction of Schwab Strategic i.e., Schwab Strategic and Defiance ETFs go up and down completely randomly.

Pair Corralation between Schwab Strategic and Defiance ETFs

If you would invest (100.00) in Defiance ETFs on December 5, 2024 and sell it today you would earn a total of  100.00  from holding Defiance ETFs or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Schwab Strategic Trust  vs.  Defiance ETFs

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.

Defiance ETFs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Defiance ETFs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Defiance ETFs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Schwab Strategic and Defiance ETFs

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

The idea behind Schwab Strategic Trust and Defiance ETFs 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.