Correlation Between Select Fund and Tiaa Cref

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

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

Diversification Opportunities for Select Fund and Tiaa Cref

0.97

Correlation Coefficient

Select Fund  Tiaa Cref

Almost no diversification

The 3 months correlation between Select and Tiaa is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund R and Tiaa Cref Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Growth and Select Fund 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 Select Fund R 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 Growth has no effect on the direction of Select Fund i.e., Select Fund and Tiaa Cref go up and down completely randomly.

Pair Corralation between Select Fund and Tiaa Cref

Assuming the 90 days horizon Select Fund R is expected to under-perform the Tiaa Cref. In addition to that, Select Fund is 1.29 times more volatile than Tiaa Cref Growth Income. It trades about -0.11 of its total potential returns per unit of risk. Tiaa Cref Growth Income is currently generating about -0.1 per unit of volatility. If you would invest  1,593  in Tiaa Cref Growth Income on December 27, 2024 and sell it today you would lose (101.00) from holding Tiaa Cref Growth Income or give up 6.34% of portfolio value over 90 days.

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

Select Fund R  vs.  Tiaa Cref Growth Income

Select Fund R

Risk-Adjusted Performance

Very Weak

Over the last 90 days Select Fund R has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Tiaa Cref Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tiaa Cref Growth Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Select Fund and Tiaa Cref

The main advantage of trading using opposite Select Fund and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund 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 Select Fund R and Tiaa Cref Growth Income 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.