Correlation Between Tiaa-cref Equity and American Growth
Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Equity and American Growth 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 Equity and American Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tiaa Cref Equity Index and American Growth Fund, you can compare the effects of market volatilities on Tiaa-cref Equity and American Growth 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 Equity with a short position of American Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Equity and American Growth.
Diversification Opportunities for Tiaa-cref Equity and American Growth
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tiaa-cref and American is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Equity Index and American Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Growth and Tiaa-cref Equity 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 Equity Index are associated (or correlated) with American Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Growth has no effect on the direction of Tiaa-cref Equity i.e., Tiaa-cref Equity and American Growth go up and down completely randomly.
Pair Corralation between Tiaa-cref Equity and American Growth
Assuming the 90 days horizon Tiaa Cref Equity Index is expected to generate 0.87 times more return on investment than American Growth. However, Tiaa Cref Equity Index is 1.15 times less risky than American Growth. It trades about 0.1 of its potential returns per unit of risk. American Growth Fund is currently generating about 0.06 per unit of risk. If you would invest 2,860 in Tiaa Cref Equity Index on September 3, 2024 and sell it today you would earn a total of 1,513 from holding Tiaa Cref Equity Index or generate 52.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tiaa Cref Equity Index vs. American Growth Fund
Performance |
| Timeline |
| Tiaa Cref Equity |
| American Growth |
Tiaa-cref Equity and American Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tiaa-cref Equity and American Growth
The main advantage of trading using opposite Tiaa-cref Equity and American Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiaa-cref Equity position performs unexpectedly, American Growth 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 American Growth will offset losses from the drop in American Growth's long position.| Tiaa-cref Equity vs. Vanguard Total Stock | Tiaa-cref Equity vs. Vanguard 500 Index | Tiaa-cref Equity vs. Vanguard Total Stock | Tiaa-cref Equity vs. Vanguard Total Stock |
| American Growth vs. Ftfa Franklin Templeton Growth | American Growth vs. Champlain Mid Cap | American Growth vs. Eip Growth And | American Growth vs. Mid Cap Growth |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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