Correlation Between Tiaa Cref and Aqr Diversified

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

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

Diversification Opportunities for Tiaa Cref and Aqr Diversified

0.7

Correlation Coefficient

Tiaa Cref  Aqr Diversified

Poor diversification

The 3 months correlation between Tiaa and Aqr is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Emerging Markets and Aqr Diversified Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Diversified Arbitrage and Tiaa Cref 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 Tiaa Cref Emerging Markets are associated (or correlated) with Aqr Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Diversified Arbitrage has no effect on the direction of Tiaa Cref i.e., Tiaa Cref and Aqr Diversified go up and down completely randomly.

Pair Corralation between Tiaa Cref and Aqr Diversified

Assuming the 90 days horizon Tiaa Cref Emerging Markets is expected to under-perform the Aqr Diversified. In addition to that, Tiaa Cref is 4.07 times more volatile than Aqr Diversified Arbitrage. It trades about -0.26 of its total potential returns per unit of risk. Aqr Diversified Arbitrage is currently generating about -0.19 per unit of volatility. If you would invest  1,229  in Aqr Diversified Arbitrage on September 12, 2024 and sell it today you would lose (8.00) from holding Aqr Diversified Arbitrage or give up 0.65% of portfolio value over 90 days.

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

Tiaa Cref Emerging Markets  vs.  Aqr Diversified Arbitrage

Tiaa Cref Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aqr Diversified Arbitrage

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tiaa Cref and Aqr Diversified

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

The idea behind Tiaa Cref Emerging Markets and Aqr Diversified Arbitrage 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.