Correlation Between Small Cap and Tiaa Cref
Can any of the company-specific risk be diversified away by investing in both Small Cap and Tiaa Cref 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 Small Cap and Tiaa Cref into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Tiaa Cref Lifecycle Index, you can compare the effects of market volatilities on Small Cap and Tiaa Cref 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 Small Cap with a short position of Tiaa Cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Tiaa Cref.
Diversification Opportunities for Small Cap and Tiaa Cref
Very poor diversification
The 3 months correlation between Small and Tiaa is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Tiaa Cref Lifecycle Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifecycle and 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 Small Cap Stock are associated (or correlated) with Tiaa Cref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa Cref Lifecycle has no effect on the direction of Small Cap i.e., Small Cap and Tiaa Cref go up and down completely randomly.
Pair Corralation between Small Cap and Tiaa Cref
Assuming the 90 days horizon Small Cap Stock is expected to under-perform the Tiaa Cref. In addition to that, Small Cap is 2.25 times more volatile than Tiaa Cref Lifecycle Index. It trades about -0.09 of its total potential returns per unit of risk. Tiaa Cref Lifecycle Index is currently generating about 0.05 per unit of volatility. If you would invest 1,486 in Tiaa Cref Lifecycle Index on September 12, 2024 and sell it today you would earn a total of 6.00 from holding Tiaa Cref Lifecycle Index or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Stock vs. Tiaa Cref Lifecycle Index
Performance |
| Timeline |
| Small Cap Stock |
| Tiaa Cref Lifecycle |
Small Cap and Tiaa Cref Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Tiaa Cref
The main advantage of trading using opposite Small Cap and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Tiaa Cref 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 Tiaa Cref will offset losses from the drop in Tiaa Cref's long position.| Small Cap vs. Shelton Emerging Markets | Small Cap vs. Kinetics Market Opportunities | Small Cap vs. Siit Emerging Markets | Small Cap vs. Investec Emerging Markets |
| Tiaa Cref vs. Needham Aggressive Growth | Tiaa Cref vs. T Rowe Price | Tiaa Cref vs. Eip Growth And | Tiaa Cref vs. Praxis Growth Index |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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