Correlation Between SWP Growth and US Treasury

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

By analyzing existing cross correlation between SWP Growth Income and US Treasury 3, you can compare the effects of market volatilities on SWP Growth and US Treasury 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 SWP Growth with a short position of US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWP Growth and US Treasury.

Diversification Opportunities for SWP Growth and US Treasury

0.82

Correlation Coefficient

SWP Growth  US Treasury

Very poor diversification

The 3 months correlation between SWP and UTRE is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SWP Growth Income and US Treasury 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 3 and SWP Growth 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 SWP Growth Income are associated (or correlated) with US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 3 has no effect on the direction of SWP Growth i.e., SWP Growth and US Treasury go up and down completely randomly.

Pair Corralation between SWP Growth and US Treasury

Considering the 90-day investment horizon SWP Growth Income is expected to generate 5.67 times more return on investment than US Treasury. However, SWP Growth is 5.67 times more volatile than US Treasury 3. It trades about 0.16 of its potential returns per unit of risk. US Treasury 3 is currently generating about 0.13 per unit of risk. If you would invest  2,654  in SWP Growth Income on August 4, 2025 and sell it today you would earn a total of  168.00  from holding SWP Growth Income or generate 6.33% return on investment over 90 days.

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

SWP Growth Income  vs.  US Treasury 3

SWP Growth Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SWP Growth Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, SWP Growth is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

US Treasury 3

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in US Treasury 3 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, US Treasury is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SWP Growth and US Treasury

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

The idea behind SWP Growth Income and US Treasury 3 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.