Correlation Between Ford and Tiaa-cref Lifecycle

Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford 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 Ford Motor and Tiaa Cref Lifecycle 2010, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Tiaa-cref Lifecycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Tiaa-cref Lifecycle.

Diversification Opportunities for Ford and Tiaa-cref Lifecycle

0.79

Correlation Coefficient

Ford  Tiaa-cref Lifecycle

Poor diversification

The 3 months correlation between Ford and Tiaa-cref is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Tiaa Cref Lifecycle 2010 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifecycle and Ford 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 Ford Motor 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 Ford i.e., Ford and Tiaa-cref Lifecycle go up and down completely randomly.

Pair Corralation between Ford and Tiaa-cref Lifecycle

Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Tiaa-cref Lifecycle. In addition to that, Ford is 6.27 times more volatile than Tiaa Cref Lifecycle 2010. It trades about -0.01 of its total potential returns per unit of risk. Tiaa Cref Lifecycle 2010 is currently generating about 0.06 per unit of volatility. If you would invest  960.00  in Tiaa Cref Lifecycle 2010 on October 22, 2024 and sell it today you would earn a total of  45.00  from holding Tiaa Cref Lifecycle 2010 or generate 4.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.56%
Values	Daily Returns

Ford Motor  vs.  Tiaa Cref Lifecycle 2010

Ford Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ford Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Ford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Tiaa Cref Lifecycle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiaa Cref Lifecycle 2010 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Tiaa-cref Lifecycle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ford and Tiaa-cref Lifecycle

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

The idea behind Ford Motor and Tiaa Cref Lifecycle 2010 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.