Correlation Between Tiaa Cref and American Beacon

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Can any of the company-specific risk be diversified away by investing in both Tiaa Cref and American Beacon 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 American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tiaa Cref Lifestyle Conservative and American Beacon Stephens, you can compare the effects of market volatilities on Tiaa Cref and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa Cref and American Beacon.

Diversification Opportunities for Tiaa Cref and American Beacon

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Tiaa and American is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Lifestyle Conservati and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens 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 Lifestyle Conservative are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Stephens has no effect on the direction of Tiaa Cref i.e., Tiaa Cref and American Beacon go up and down completely randomly.

Pair Corralation between Tiaa Cref and American Beacon

Assuming the 90 days horizon Tiaa Cref is expected to generate 1.34 times less return on investment than American Beacon. But when comparing it to its historical volatility, Tiaa Cref Lifestyle Conservative is 3.15 times less risky than American Beacon. It trades about 0.1 of its potential returns per unit of risk. American Beacon Stephens is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,338  in American Beacon Stephens on August 27, 2024 and sell it today you would earn a total of  339.00  from holding American Beacon Stephens or generate 25.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Tiaa Cref Lifestyle Conservati  vs.  American Beacon Stephens

 Performance 
       Timeline  
Tiaa Cref Lifestyle 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Lifestyle Conservative are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Tiaa Cref is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
American Beacon Stephens 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Stephens are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, American Beacon may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Tiaa Cref and American Beacon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tiaa Cref and American Beacon

The main advantage of trading using opposite Tiaa Cref and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiaa Cref position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon's long position.
The idea behind Tiaa Cref Lifestyle Conservative and American Beacon Stephens 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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