Correlation Between Barings Active and Tiaa Cref

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

By analyzing existing cross correlation between Barings Active Short and Tiaa Cref Short Term Bond, you can compare the effects of market volatilities on Barings Active 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 Barings Active with a short position of Tiaa Cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Tiaa Cref.

Diversification Opportunities for Barings Active and Tiaa Cref

0.8

Correlation Coefficient

Barings Active  Tiaa Cref

Very poor diversification

The 3 months correlation between Barings and Tiaa is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short and Tiaa Cref Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Short and Barings Active 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 Barings Active Short 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 Short has no effect on the direction of Barings Active i.e., Barings Active and Tiaa Cref go up and down completely randomly.

Pair Corralation between Barings Active and Tiaa Cref

Assuming the 90 days horizon Barings Active Short is expected to generate 1.05 times more return on investment than Tiaa Cref. However, Barings Active is 1.05 times more volatile than Tiaa Cref Short Term Bond. It trades about -0.07 of its potential returns per unit of risk. Tiaa Cref Short Term Bond is currently generating about -0.27 per unit of risk. If you would invest  926.00  in Barings Active Short on October 9, 2024 and sell it today you would lose (1.00) from holding Barings Active Short or give up 0.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Barings Active Short  vs.  Tiaa Cref Short Term Bond

Barings Active Short

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Active Short are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Barings Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tiaa Cref Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiaa Cref Short Term Bond 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 Barings Active and Tiaa Cref

The main advantage of trading using opposite Barings Active and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active 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 Barings Active Short and Tiaa Cref Short Term Bond 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.