Correlation Between Us Government and Tiaa Cref

Can any of the company-specific risk be diversified away by investing in both Us Government 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 Government 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 Government Plus and Tiaa Cref Lifestyle Moderate, you can compare the effects of market volatilities on Us Government 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 Government with a short position of Tiaa Cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Tiaa Cref.

Diversification Opportunities for Us Government and Tiaa Cref

0.41

Correlation Coefficient

Us Government  Tiaa Cref

Very weak diversification

The 3 months correlation between GVPIX and Tiaa is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Plus and Tiaa Cref Lifestyle Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifestyle and Us Government 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 Government Plus 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 Lifestyle has no effect on the direction of Us Government i.e., Us Government and Tiaa Cref go up and down completely randomly.

Pair Corralation between Us Government and Tiaa Cref

Assuming the 90 days horizon Us Government Plus is expected to under-perform the Tiaa Cref. In addition to that, Us Government is 2.33 times more volatile than Tiaa Cref Lifestyle Moderate. It trades about -0.18 of its total potential returns per unit of risk. Tiaa Cref Lifestyle Moderate is currently generating about -0.09 per unit of volatility. If you would invest  1,529  in Tiaa Cref Lifestyle Moderate on September 22, 2024 and sell it today you would lose (41.00) from holding Tiaa Cref Lifestyle Moderate or give up 2.68% of portfolio value over 90 days.

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

Us Government Plus  vs.  Tiaa Cref Lifestyle Moderate

Us Government Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Us Government Plus has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Tiaa Cref Lifestyle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiaa Cref Lifestyle Moderate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Us Government and Tiaa Cref

The main advantage of trading using opposite Us Government and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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 Government Plus and Tiaa Cref Lifestyle Moderate 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.