Correlation Between Schwab Tax-free and Schwab Opportunistic
Can any of the company-specific risk be diversified away by investing in both Schwab Tax-free and Schwab Opportunistic 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 Tax-free and Schwab Opportunistic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schwab Tax Free Bond and Schwab Opportunistic Municipal, you can compare the effects of market volatilities on Schwab Tax-free and Schwab Opportunistic 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 Tax-free with a short position of Schwab Opportunistic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schwab Tax-free and Schwab Opportunistic.
Diversification Opportunities for Schwab Tax-free and Schwab Opportunistic
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Schwab and Schwab is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Tax Free Bond and Schwab Opportunistic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Opportunistic and Schwab Tax-free 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 Tax Free Bond are associated (or correlated) with Schwab Opportunistic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Opportunistic has no effect on the direction of Schwab Tax-free i.e., Schwab Tax-free and Schwab Opportunistic go up and down completely randomly.
Pair Corralation between Schwab Tax-free and Schwab Opportunistic
Assuming the 90 days horizon Schwab Tax-free is expected to generate 1.64 times less return on investment than Schwab Opportunistic. But when comparing it to its historical volatility, Schwab Tax Free Bond is 1.3 times less risky than Schwab Opportunistic. It trades about 0.14 of its potential returns per unit of risk. Schwab Opportunistic Municipal is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 872.00 in Schwab Opportunistic Municipal on September 11, 2025 and sell it today you would earn a total of 13.00 from holding Schwab Opportunistic Municipal or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Schwab Tax Free Bond vs. Schwab Opportunistic Municipal
Performance |
| Timeline |
| Schwab Tax Free |
| Schwab Opportunistic |
Schwab Tax-free and Schwab Opportunistic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schwab Tax-free and Schwab Opportunistic
The main advantage of trading using opposite Schwab Tax-free and Schwab Opportunistic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Tax-free position performs unexpectedly, Schwab Opportunistic 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 Schwab Opportunistic will offset losses from the drop in Schwab Opportunistic's long position.| Schwab Tax-free vs. Elfun Diversified Fund | Schwab Tax-free vs. Manning Napier Diversified | Schwab Tax-free vs. Columbia Diversified Equity | Schwab Tax-free vs. Calvert Conservative Allocation |
| Schwab Opportunistic vs. T Rowe Price | Schwab Opportunistic vs. T Rowe Price | Schwab Opportunistic vs. Morningstar Defensive Bond | Schwab Opportunistic vs. Metropolitan West Unconstrained |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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