Correlation Between Fmasx and Tiaa-cref Large-cap

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

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

Diversification Opportunities for Fmasx and Tiaa-cref Large-cap

0.47

Correlation Coefficient

Fmasx  Tiaa-cref Large-cap

Very weak diversification

The 3 months correlation between Fmasx and Tiaa-cref is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fmasx 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-cap and Fmasx 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 Fmasx are associated (or correlated) with Tiaa-cref Large-cap. 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-cap has no effect on the direction of Fmasx i.e., Fmasx and Tiaa-cref Large-cap go up and down completely randomly.

Pair Corralation between Fmasx and Tiaa-cref Large-cap

Assuming the 90 days horizon Fmasx is expected to under-perform the Tiaa-cref Large-cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fmasx is 1.16 times less risky than Tiaa-cref Large-cap. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Tiaa Cref Large Cap Growth is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,898  in Tiaa Cref Large Cap Growth on October 9, 2024 and sell it today you would earn a total of  36.00  from holding Tiaa Cref Large Cap Growth or generate 0.52% return on investment over 90 days.

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

Fmasx  vs.  Tiaa Cref Large Cap Growth

Fmasx

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tiaa-cref Large-cap

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Large Cap Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tiaa-cref Large-cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fmasx and Tiaa-cref Large-cap

The main advantage of trading using opposite Fmasx and Tiaa-cref Large-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fmasx position performs unexpectedly, Tiaa-cref Large-cap 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 Large-cap will offset losses from the drop in Tiaa-cref Large-cap's long position.

The idea behind Fmasx 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.