Correlation Between Tiaa-cref Small/mid-cap and Touchstone Sands
Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Small/mid-cap and Touchstone Sands 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/mid-cap and Touchstone Sands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tiaa Cref Smallmid Cap Equity and Touchstone Sands Capital, you can compare the effects of market volatilities on Tiaa-cref Small/mid-cap and Touchstone Sands 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/mid-cap with a short position of Touchstone Sands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Small/mid-cap and Touchstone Sands.
Diversification Opportunities for Tiaa-cref Small/mid-cap and Touchstone Sands
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tiaa-cref and TOUCHSTONE is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Smallmid Cap Equity and Touchstone Sands Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Sands Capital and Tiaa-cref Small/mid-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 Smallmid Cap Equity are associated (or correlated) with Touchstone Sands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Sands Capital has no effect on the direction of Tiaa-cref Small/mid-cap i.e., Tiaa-cref Small/mid-cap and Touchstone Sands go up and down completely randomly.
Pair Corralation between Tiaa-cref Small/mid-cap and Touchstone Sands
Assuming the 90 days horizon Tiaa Cref Smallmid Cap Equity is expected to generate 1.26 times more return on investment than Touchstone Sands. However, Tiaa-cref Small/mid-cap is 1.26 times more volatile than Touchstone Sands Capital. It trades about 0.08 of its potential returns per unit of risk. Touchstone Sands Capital is currently generating about 0.03 per unit of risk. If you would invest 1,205 in Tiaa Cref Smallmid Cap Equity on September 3, 2024 and sell it today you would earn a total of 580.00 from holding Tiaa Cref Smallmid Cap Equity or generate 48.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tiaa Cref Smallmid Cap Equity vs. Touchstone Sands Capital
Performance |
| Timeline |
| Tiaa-cref Small/mid-cap |
| Touchstone Sands Capital |
Tiaa-cref Small/mid-cap and Touchstone Sands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tiaa-cref Small/mid-cap and Touchstone Sands
The main advantage of trading using opposite Tiaa-cref Small/mid-cap and Touchstone Sands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiaa-cref Small/mid-cap position performs unexpectedly, Touchstone Sands 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 Touchstone Sands will offset losses from the drop in Touchstone Sands' long position.The idea behind Tiaa Cref Smallmid Cap Equity and Touchstone Sands Capital 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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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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