Correlation Between College Retirement and Tiaa-cref Equity
Can any of the company-specific risk be diversified away by investing in both College Retirement and Tiaa-cref Equity 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 College Retirement and Tiaa-cref Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between College Retirement Equities and Tiaa Cref Equity Index, you can compare the effects of market volatilities on College Retirement and Tiaa-cref Equity 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 College Retirement with a short position of Tiaa-cref Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of College Retirement and Tiaa-cref Equity.
Diversification Opportunities for College Retirement and Tiaa-cref Equity
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between College and Tiaa-cref is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding College Retirement Equities 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 College Retirement 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 College Retirement Equities are associated (or correlated) with Tiaa-cref Equity. 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 College Retirement i.e., College Retirement and Tiaa-cref Equity go up and down completely randomly.
Pair Corralation between College Retirement and Tiaa-cref Equity
Assuming the 90 days trading horizon College Retirement Equities is expected to under-perform the Tiaa-cref Equity. But the fund apears to be less risky and, when comparing its historical volatility, College Retirement Equities is 1.13 times less risky than Tiaa-cref Equity. The fund trades about -0.1 of its potential returns per unit of risk. The Tiaa Cref Equity Index is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 4,233 in Tiaa Cref Equity Index on October 9, 2024 and sell it today you would lose (70.00) from holding Tiaa Cref Equity Index or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
College Retirement Equities vs. Tiaa Cref Equity Index
Performance |
| Timeline |
| College Retirement |
| Tiaa Cref Equity |
College Retirement and Tiaa-cref Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with College Retirement and Tiaa-cref Equity
The main advantage of trading using opposite College Retirement and Tiaa-cref Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if College Retirement position performs unexpectedly, Tiaa-cref Equity 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 Equity will offset losses from the drop in Tiaa-cref Equity's long position.| College Retirement vs. Vanguard Total Stock | College Retirement vs. Vanguard 500 Index | College Retirement vs. Vanguard Total Stock | College Retirement vs. Vanguard Total Stock |
| Tiaa-cref Equity vs. Tiaa Cref Emerging Markets | Tiaa-cref Equity vs. Tiaa Cref Emerging Markets | Tiaa-cref Equity vs. Tiaa Cref Emerging Markets | Tiaa-cref Equity vs. Tiaa Cref Emerging Markets |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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