Correlation Between Tiaa-cref Small-cap and Franklin Lifesmart
Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Small-cap and Franklin Lifesmart 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 Small-cap and Franklin Lifesmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tiaa Cref Small Cap Blend and Franklin Lifesmart 2055, you can compare the effects of market volatilities on Tiaa-cref Small-cap and Franklin Lifesmart 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 Small-cap with a short position of Franklin Lifesmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Small-cap and Franklin Lifesmart.
Diversification Opportunities for Tiaa-cref Small-cap and Franklin Lifesmart
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tiaa-cref and FRANKLIN is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Small Cap Blend and Franklin Lifesmart 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Lifesmart 2055 and Tiaa-cref Small-cap 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 Small Cap Blend are associated (or correlated) with Franklin Lifesmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Lifesmart 2055 has no effect on the direction of Tiaa-cref Small-cap i.e., Tiaa-cref Small-cap and Franklin Lifesmart go up and down completely randomly.
Pair Corralation between Tiaa-cref Small-cap and Franklin Lifesmart
Assuming the 90 days horizon Tiaa Cref Small Cap Blend is expected to generate 2.91 times more return on investment than Franklin Lifesmart. However, Tiaa-cref Small-cap is 2.91 times more volatile than Franklin Lifesmart 2055. It trades about 0.29 of its potential returns per unit of risk. Franklin Lifesmart 2055 is currently generating about 0.26 per unit of risk. If you would invest 2,495 in Tiaa Cref Small Cap Blend on September 2, 2024 and sell it today you would earn a total of 257.00 from holding Tiaa Cref Small Cap Blend or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tiaa Cref Small Cap Blend vs. Franklin Lifesmart 2055
Performance |
| Timeline |
| Tiaa-cref Small-cap |
| Franklin Lifesmart 2055 |
Tiaa-cref Small-cap and Franklin Lifesmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tiaa-cref Small-cap and Franklin Lifesmart
The main advantage of trading using opposite Tiaa-cref Small-cap and Franklin Lifesmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiaa-cref Small-cap position performs unexpectedly, Franklin Lifesmart 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 Franklin Lifesmart will offset losses from the drop in Franklin Lifesmart's long position.| Tiaa-cref Small-cap vs. Bbh Partner Fund | Tiaa-cref Small-cap vs. Rbc Funds Trust | Tiaa-cref Small-cap vs. Balanced Fund Investor | Tiaa-cref Small-cap vs. Volumetric Fund Volumetric |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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