Correlation Between Avantis Large and Tiaa Cref

Can any of the company-specific risk be diversified away by investing in both Avantis Large and Tiaa Cref 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 Avantis Large and Tiaa Cref into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avantis Large Cap and Tiaa Cref Lifecycle 2050, you can compare the effects of market volatilities on Avantis Large and Tiaa Cref 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 Avantis Large with a short position of Tiaa Cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Large and Tiaa Cref.

Diversification Opportunities for Avantis Large and Tiaa Cref

0.64

Correlation Coefficient

Avantis Large  Tiaa Cref

Poor diversification

The 3 months correlation between Avantis and Tiaa is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Large Cap and Tiaa Cref Lifecycle 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifecycle and Avantis Large 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 Avantis Large Cap are associated (or correlated) with Tiaa Cref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa Cref Lifecycle has no effect on the direction of Avantis Large i.e., Avantis Large and Tiaa Cref go up and down completely randomly.

Pair Corralation between Avantis Large and Tiaa Cref

Assuming the 90 days horizon Avantis Large Cap is expected to under-perform the Tiaa Cref. But the mutual fund apears to be less risky and, when comparing its historical volatility, Avantis Large Cap is 1.16 times less risky than Tiaa Cref. The mutual fund trades about -0.45 of its potential returns per unit of risk. The Tiaa Cref Lifecycle 2050 is currently generating about -0.26 of returns per unit of risk over similar time horizon. If you would invest  1,545  in Tiaa Cref Lifecycle 2050 on September 24, 2024 and sell it today you would lose (80.00) from holding Tiaa Cref Lifecycle 2050 or give up 5.18% of portfolio value over 90 days.

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

Avantis Large Cap  vs.  Tiaa Cref Lifecycle 2050

Avantis Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantis Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Avantis Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tiaa Cref Lifecycle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiaa Cref Lifecycle 2050 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Tiaa Cref is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Avantis Large and Tiaa Cref

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

The idea behind Avantis Large Cap and Tiaa Cref Lifecycle 2050 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.