Correlation Between Schwab Treasury and 361 Global

Can any of the company-specific risk be diversified away by investing in both Schwab Treasury and 361 Global 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 Treasury and 361 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Schwab Treasury Money and 361 Global Longshort, you can compare the effects of market volatilities on Schwab Treasury and 361 Global 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 Treasury with a short position of 361 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Treasury and 361 Global.

Diversification Opportunities for Schwab Treasury and 361 Global

0.71

Correlation Coefficient

Schwab Treasury  361 Global

Poor diversification

The 3 months correlation between Schwab and 361 is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Treasury Money and 361 Global Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 361 Global Longshort and Schwab Treasury 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 Treasury Money are associated (or correlated) with 361 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 361 Global Longshort has no effect on the direction of Schwab Treasury i.e., Schwab Treasury and 361 Global go up and down completely randomly.

Pair Corralation between Schwab Treasury and 361 Global

Assuming the 90 days horizon Schwab Treasury is expected to generate 1.53 times less return on investment than 361 Global. But when comparing it to its historical volatility, Schwab Treasury Money is 3.1 times less risky than 361 Global. It trades about 0.13 of its potential returns per unit of risk. 361 Global Longshort is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,261  in 361 Global Longshort on September 12, 2024 and sell it today you would earn a total of  19.00  from holding 361 Global Longshort or generate 1.51% return on investment over 90 days.

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

Schwab Treasury Money  vs.  361 Global Longshort

Schwab Treasury Money

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Treasury Money are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Schwab Treasury is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

361 Global Longshort

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 361 Global Longshort are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, 361 Global 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 Treasury and 361 Global

The main advantage of trading using opposite Schwab Treasury and 361 Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Treasury position performs unexpectedly, 361 Global 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 361 Global will offset losses from the drop in 361 Global's long position.

The idea behind Schwab Treasury Money and 361 Global Longshort 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.