Correlation Between Us Small and Tiaa Cref

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

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

Diversification Opportunities for Us Small and Tiaa Cref

0.99

Correlation Coefficient

Us Small  Tiaa Cref

No risk reduction

The 3 months correlation between DFSTX and Tiaa is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Us Small Cap and Tiaa Cref Smallmid Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Smallmid and Us Small 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 Us Small 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 Smallmid has no effect on the direction of Us Small i.e., Us Small and Tiaa Cref go up and down completely randomly.

Pair Corralation between Us Small and Tiaa Cref

Assuming the 90 days horizon Us Small is expected to generate 1.12 times less return on investment than Tiaa Cref. In addition to that, Us Small is 1.18 times more volatile than Tiaa Cref Smallmid Cap Equity. It trades about 0.17 of its total potential returns per unit of risk. Tiaa Cref Smallmid Cap Equity is currently generating about 0.22 per unit of volatility. If you would invest  1,553  in Tiaa Cref Smallmid Cap Equity on August 31, 2024 and sell it today you would earn a total of  230.00  from holding Tiaa Cref Smallmid Cap Equity or generate 14.81% return on investment over 90 days.

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

Us Small Cap  vs.  Tiaa Cref Smallmid Cap Equity

Us Small Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Us Small Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Us Small may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Tiaa Cref Smallmid

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Smallmid Cap Equity are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Tiaa Cref showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Us Small and Tiaa Cref

The main advantage of trading using opposite Us Small and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Small 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 Us Small Cap and Tiaa Cref Smallmid Cap Equity 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 Stocks Directory module to find actively traded stocks across global markets.