Correlation Between Tiaa-cref Lifecycle and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Lifecycle and Dow Jones 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 Lifecycle and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tiaa Cref Lifecycle Index and Dow Jones Industrial, you can compare the effects of market volatilities on Tiaa-cref Lifecycle and Dow Jones 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 Lifecycle with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Lifecycle and Dow Jones.
Diversification Opportunities for Tiaa-cref Lifecycle and Dow Jones
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tiaa-cref and Dow is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Lifecycle Index and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Tiaa-cref Lifecycle 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 Lifecycle Index are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Tiaa-cref Lifecycle i.e., Tiaa-cref Lifecycle and Dow Jones go up and down completely randomly.
Pair Corralation between Tiaa-cref Lifecycle and Dow Jones
Assuming the 90 days horizon Tiaa-cref Lifecycle is expected to generate 1.26 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Tiaa Cref Lifecycle Index is 1.16 times less risky than Dow Jones. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,624,550 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 805,101 from holding Dow Jones Industrial or generate 22.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tiaa Cref Lifecycle Index vs. Dow Jones Industrial
Performance |
| Timeline |
Tiaa-cref Lifecycle and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Tiaa Cref Lifecycle Index
Pair trading matchups for Tiaa-cref Lifecycle
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Tiaa-cref Lifecycle and Dow Jones
The main advantage of trading using opposite Tiaa-cref Lifecycle and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiaa-cref Lifecycle position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Tiaa-cref Lifecycle vs. Goldman Sachs High | Tiaa-cref Lifecycle vs. Victory High Income | Tiaa-cref Lifecycle vs. California High Yield Municipal | Tiaa-cref Lifecycle vs. Ab Global Risk |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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