Correlation Between Schwab Treasury and Short Term

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

Diversification Opportunities for Schwab Treasury and Short Term

-0.09

Correlation Coefficient

Schwab Treasury  Short Term

Good diversification

The 3 months correlation between Schwab and Short is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Treasury Money and Short Term Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Bond 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 Short Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Bond has no effect on the direction of Schwab Treasury i.e., Schwab Treasury and Short Term go up and down completely randomly.

Pair Corralation between Schwab Treasury and Short Term

If you would invest  951.00  in Short Term Bond Fund on September 16, 2024 and sell it today you would earn a total of  1.00  from holding Short Term Bond Fund or generate 0.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Schwab Treasury Money  vs.  Short Term Bond Fund

Schwab Treasury Money

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab Treasury Money has generated negative risk-adjusted returns adding no value to fund investors. 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.

Short Term Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Short Term Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Short Term 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 Short Term

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

The idea behind Schwab Treasury Money and Short Term Bond Fund 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.