Correlation Between Tiaa-cref International and Tiaa-cref Small-cap

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

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

Diversification Opportunities for Tiaa-cref International and Tiaa-cref Small-cap

-0.54

Correlation Coefficient

Tiaa-cref International  Tiaa-cref Small-cap

Excellent diversification

The 3 months correlation between Tiaa-cref and Tiaa-cref is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref International Equity and Tiaa Cref Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa-cref Small-cap and Tiaa-cref International 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 International Equity are associated (or correlated) with Tiaa-cref Small-cap. 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 Small-cap has no effect on the direction of Tiaa-cref International i.e., Tiaa-cref International and Tiaa-cref Small-cap go up and down completely randomly.

Pair Corralation between Tiaa-cref International and Tiaa-cref Small-cap

Assuming the 90 days horizon Tiaa Cref International Equity is expected to under-perform the Tiaa-cref Small-cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Tiaa Cref International Equity is 2.19 times less risky than Tiaa-cref Small-cap. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Tiaa Cref Small Cap Equity is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,928  in Tiaa Cref Small Cap Equity on September 2, 2024 and sell it today you would earn a total of  196.00  from holding Tiaa Cref Small Cap Equity or generate 10.17% return on investment over 90 days.

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

Tiaa Cref International Equity  vs.  Tiaa Cref Small Cap Equity

Tiaa Cref International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tiaa-cref Small-cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Small Cap Equity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Tiaa-cref Small-cap showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tiaa-cref International and Tiaa-cref Small-cap

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

The idea behind Tiaa Cref International Equity and Tiaa Cref Small 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.