Correlation Between Vanguard Small-cap and Tiaa-cref Lifecycle
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap and Tiaa-cref Lifecycle 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 Vanguard Small-cap and Tiaa-cref Lifecycle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Value and Tiaa Cref Lifecycle 2050, you can compare the effects of market volatilities on Vanguard Small-cap and Tiaa-cref Lifecycle 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 Vanguard Small-cap with a short position of Tiaa-cref Lifecycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Tiaa-cref Lifecycle.
Diversification Opportunities for Vanguard Small-cap and Tiaa-cref Lifecycle
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Tiaa-cref is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Value and Tiaa Cref Lifecycle 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifecycle and Vanguard 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 Vanguard Small Cap Value are associated (or correlated) with Tiaa-cref Lifecycle. 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 Vanguard Small-cap i.e., Vanguard Small-cap and Tiaa-cref Lifecycle go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Tiaa-cref Lifecycle
Assuming the 90 days horizon Vanguard Small Cap Value is expected to generate 1.19 times more return on investment than Tiaa-cref Lifecycle. However, Vanguard Small-cap is 1.19 times more volatile than Tiaa Cref Lifecycle 2050. It trades about 0.29 of its potential returns per unit of risk. Tiaa Cref Lifecycle 2050 is currently generating about 0.15 per unit of risk. If you would invest 4,766 in Vanguard Small Cap Value on October 24, 2024 and sell it today you would earn a total of 216.00 from holding Vanguard Small Cap Value or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Value vs. Tiaa Cref Lifecycle 2050
Performance |
| Timeline |
| Vanguard Small Cap |
| Tiaa Cref Lifecycle |
Vanguard Small-cap and Tiaa-cref Lifecycle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Tiaa-cref Lifecycle
The main advantage of trading using opposite Vanguard Small-cap and Tiaa-cref Lifecycle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap position performs unexpectedly, Tiaa-cref Lifecycle 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 Lifecycle will offset losses from the drop in Tiaa-cref Lifecycle's long position.| Vanguard Small-cap vs. Virtus Multi Sector Short | Vanguard Small-cap vs. Vanguard Short Term Government | Vanguard Small-cap vs. Siit Ultra Short | Vanguard Small-cap vs. Fidelity Flex Servative |
| Tiaa-cref Lifecycle vs. William Blair Small | Tiaa-cref Lifecycle vs. American Century Etf | Tiaa-cref Lifecycle vs. Mid Cap Value Profund | Tiaa-cref Lifecycle vs. Mutual Of America |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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