Correlation Between Amazon and Tiaa Cref

Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and Tiaa Cref into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amazon Inc and Tiaa Cref Large Cap Growth, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of Tiaa Cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Tiaa Cref.

Diversification Opportunities for Amazon and Tiaa Cref

0.51

Correlation Coefficient

Amazon  Tiaa Cref

Very weak diversification

The 3 months correlation between Amazon and Tiaa is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Tiaa Cref Large Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Large and Amazon 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 Amazon Inc 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 Large has no effect on the direction of Amazon i.e., Amazon and Tiaa Cref go up and down completely randomly.

Pair Corralation between Amazon and Tiaa Cref

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Tiaa Cref. In addition to that, Amazon is 1.49 times more volatile than Tiaa Cref Large Cap Growth. It trades about -0.32 of its total potential returns per unit of risk. Tiaa Cref Large Cap Growth is currently generating about -0.15 per unit of volatility. If you would invest  6,829  in Tiaa Cref Large Cap Growth on December 2, 2024 and sell it today you would lose (245.00) from holding Tiaa Cref Large Cap Growth or give up 3.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Amazon Inc  vs.  Tiaa Cref Large Cap Growth

Amazon Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Amazon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Tiaa Cref Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tiaa Cref Large Cap Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Tiaa Cref is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amazon and Tiaa Cref

The main advantage of trading using opposite Amazon and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.

The idea behind Amazon Inc and Tiaa Cref Large Cap Growth 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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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.