Correlation Between Schwab Treasury and Fidelity Sai

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

By analyzing existing cross correlation between Schwab Treasury Inflation and Fidelity Sai Convertible, you can compare the effects of market volatilities on Schwab Treasury and Fidelity Sai 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 Fidelity Sai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Treasury and Fidelity Sai.

Diversification Opportunities for Schwab Treasury and Fidelity Sai

-0.39

Correlation Coefficient

Schwab Treasury  Fidelity Sai

Very good diversification

The 3 months correlation between Schwab and Fidelity is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Treasury Inflation and Fidelity Sai Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sai Convertible 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 Inflation are associated (or correlated) with Fidelity Sai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sai Convertible has no effect on the direction of Schwab Treasury i.e., Schwab Treasury and Fidelity Sai go up and down completely randomly.

Pair Corralation between Schwab Treasury and Fidelity Sai

Assuming the 90 days horizon Schwab Treasury Inflation is expected to under-perform the Fidelity Sai. But the mutual fund apears to be less risky and, when comparing its historical volatility, Schwab Treasury Inflation is 2.12 times less risky than Fidelity Sai. The mutual fund trades about -0.23 of its potential returns per unit of risk. The Fidelity Sai Convertible is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,076  in Fidelity Sai Convertible on September 22, 2024 and sell it today you would lose (25.00) from holding Fidelity Sai Convertible or give up 2.32% of portfolio value over 90 days.

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

Schwab Treasury Inflation  vs.  Fidelity Sai Convertible

Schwab Treasury Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab Treasury Inflation 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.

Fidelity Sai Convertible

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Sai Convertible has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fidelity Sai 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 Fidelity Sai

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

The idea behind Schwab Treasury Inflation and Fidelity Sai Convertible 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.