Correlation Between Fa 529 and Tiaa-cref Lifecycle
Can any of the company-specific risk be diversified away by investing in both Fa 529 and Tiaa-cref Lifecycle 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 Fa 529 and Tiaa-cref Lifecycle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fa 529 Aggressive and Tiaa Cref Lifecycle Index, you can compare the effects of market volatilities on Fa 529 and Tiaa-cref Lifecycle 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 Fa 529 with a short position of Tiaa-cref Lifecycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fa 529 and Tiaa-cref Lifecycle.
Diversification Opportunities for Fa 529 and Tiaa-cref Lifecycle
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FFCGX and TIAA-CREF is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fa 529 Aggressive and Tiaa Cref Lifecycle Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifecycle and Fa 529 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 Fa 529 Aggressive are associated (or correlated) with Tiaa-cref Lifecycle. 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 Lifecycle has no effect on the direction of Fa 529 i.e., Fa 529 and Tiaa-cref Lifecycle go up and down completely randomly.
Pair Corralation between Fa 529 and Tiaa-cref Lifecycle
Assuming the 90 days horizon Fa 529 Aggressive is expected to generate 1.57 times more return on investment than Tiaa-cref Lifecycle. However, Fa 529 is 1.57 times more volatile than Tiaa Cref Lifecycle Index. It trades about 0.09 of its potential returns per unit of risk. Tiaa Cref Lifecycle Index is currently generating about 0.08 per unit of risk. If you would invest 3,000 in Fa 529 Aggressive on September 3, 2024 and sell it today you would earn a total of 1,062 from holding Fa 529 Aggressive or generate 35.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fa 529 Aggressive vs. Tiaa Cref Lifecycle Index
Performance |
| Timeline |
| Fa 529 Aggressive |
| Tiaa Cref Lifecycle |
Fa 529 and Tiaa-cref Lifecycle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fa 529 and Tiaa-cref Lifecycle
The main advantage of trading using opposite Fa 529 and Tiaa-cref Lifecycle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fa 529 position performs unexpectedly, Tiaa-cref Lifecycle 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 Lifecycle will offset losses from the drop in Tiaa-cref Lifecycle's long position.| Fa 529 vs. Advent Claymore Convertible | Fa 529 vs. Lord Abbett Convertible | Fa 529 vs. Rationalpier 88 Convertible | Fa 529 vs. Absolute Convertible Arbitrage |
| Tiaa-cref Lifecycle vs. Franklin Lifesmart 2050 | Tiaa-cref Lifecycle vs. T Rowe Price | Tiaa-cref Lifecycle vs. Legg Mason Partners | Tiaa-cref Lifecycle vs. T Rowe Price |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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