Correlation Between Prudential Health and Tiaa Cref

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

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

Diversification Opportunities for Prudential Health and Tiaa Cref

-0.51

Correlation Coefficient

Prudential Health  Tiaa Cref

Excellent diversification

The 3 months correlation between Prudential and Tiaa is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Health Sciences and Tiaa Cref Mid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Mid and Prudential Health 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 Prudential Health Sciences 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 Mid has no effect on the direction of Prudential Health i.e., Prudential Health and Tiaa Cref go up and down completely randomly.

Pair Corralation between Prudential Health and Tiaa Cref

Assuming the 90 days horizon Prudential Health Sciences is expected to under-perform the Tiaa Cref. But the mutual fund apears to be less risky and, when comparing its historical volatility, Prudential Health Sciences is 1.07 times less risky than Tiaa Cref. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Tiaa Cref Mid Cap Growth is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,985  in Tiaa Cref Mid Cap Growth on September 13, 2024 and sell it today you would earn a total of  265.00  from holding Tiaa Cref Mid Cap Growth or generate 13.35% return on investment over 90 days.

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

Prudential Health Sciences  vs.  Tiaa Cref Mid Cap Growth

Prudential Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Health Sciences has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Tiaa Cref Mid

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Mid Cap Growth are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tiaa Cref showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Prudential Health and Tiaa Cref

The main advantage of trading using opposite Prudential Health and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Health 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 Prudential Health Sciences and Tiaa Cref Mid Cap Growth 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.