Correlation Between Microsoft and Tiaa Cref

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

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

Diversification Opportunities for Microsoft and Tiaa Cref

0.27

Correlation Coefficient

Microsoft  Tiaa Cref

Modest diversification

The 3 months correlation between Microsoft and Tiaa is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Tiaa Cref Equity Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Equity and Microsoft 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 Microsoft 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 Equity has no effect on the direction of Microsoft i.e., Microsoft and Tiaa Cref go up and down completely randomly.

Pair Corralation between Microsoft and Tiaa Cref

Given the investment horizon of 90 days Microsoft is expected to generate 1.54 times less return on investment than Tiaa Cref. In addition to that, Microsoft is 1.76 times more volatile than Tiaa Cref Equity Index. It trades about 0.06 of its total potential returns per unit of risk. Tiaa Cref Equity Index is currently generating about 0.16 per unit of volatility. If you would invest  4,040  in Tiaa Cref Equity Index on September 14, 2024 and sell it today you would earn a total of  306.00  from holding Tiaa Cref Equity Index or generate 7.57% return on investment over 90 days.

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

Microsoft  vs.  Tiaa Cref Equity Index

Microsoft

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Tiaa Cref Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Equity Index are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tiaa Cref may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Microsoft and Tiaa Cref

The main advantage of trading using opposite Microsoft and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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 Microsoft and Tiaa Cref Equity Index 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.