Correlation Between Federated Bond and Tiaa-cref Inflation

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Can any of the company-specific risk be diversified away by investing in both Federated Bond and Tiaa-cref Inflation 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 Federated Bond and Tiaa-cref Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Bond Fund and Tiaa Cref Inflation Link, you can compare the effects of market volatilities on Federated Bond and Tiaa-cref Inflation 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 Federated Bond with a short position of Tiaa-cref Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Bond and Tiaa-cref Inflation.

Diversification Opportunities for Federated Bond and Tiaa-cref Inflation

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between FEDERATED and Tiaa-cref is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Federated Bond Fund and Tiaa Cref Inflation Link in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Inflation and Federated Bond 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 Federated Bond Fund are associated (or correlated) with Tiaa-cref Inflation. 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 Inflation has no effect on the direction of Federated Bond i.e., Federated Bond and Tiaa-cref Inflation go up and down completely randomly.

Pair Corralation between Federated Bond and Tiaa-cref Inflation

Assuming the 90 days horizon Federated Bond Fund is expected to generate 1.43 times more return on investment than Tiaa-cref Inflation. However, Federated Bond is 1.43 times more volatile than Tiaa Cref Inflation Link. It trades about -0.06 of its potential returns per unit of risk. Tiaa Cref Inflation Link is currently generating about -0.11 per unit of risk. If you would invest  830.00  in Federated Bond Fund on October 7, 2024 and sell it today you would lose (6.00) from holding Federated Bond Fund or give up 0.72% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Federated Bond Fund  vs.  Tiaa Cref Inflation Link

 Performance 
       Timeline  
Federated Bond 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Federated Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Federated Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Tiaa Cref Inflation 

Risk-Adjusted Performance

0 of 100

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

Federated Bond and Tiaa-cref Inflation Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Federated Bond and Tiaa-cref Inflation

The main advantage of trading using opposite Federated Bond and Tiaa-cref Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Bond position performs unexpectedly, Tiaa-cref Inflation 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 Inflation will offset losses from the drop in Tiaa-cref Inflation's long position.
The idea behind Federated Bond Fund and Tiaa Cref Inflation Link 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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