Correlation Between Inflation-protected and Tiaa Cref

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

By analyzing existing cross correlation between Inflation Protected Bond Fund and Tiaa Cref Inflation Link, you can compare the effects of market volatilities on Inflation-protected 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 Inflation-protected with a short position of Tiaa Cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation-protected and Tiaa Cref.

Diversification Opportunities for Inflation-protected and Tiaa Cref

0.57

Correlation Coefficient

Inflation-protected  Tiaa Cref

Very weak diversification

The 3 months correlation between Inflation-protected and Tiaa is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected 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 Inflation-protected 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 Inflation Protected Bond Fund 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 Inflation has no effect on the direction of Inflation-protected i.e., Inflation-protected and Tiaa Cref go up and down completely randomly.

Pair Corralation between Inflation-protected and Tiaa Cref

Assuming the 90 days horizon Inflation Protected Bond Fund is expected to under-perform the Tiaa Cref. In addition to that, Inflation-protected is 3.49 times more volatile than Tiaa Cref Inflation Link. It trades about -0.29 of its total potential returns per unit of risk. Tiaa Cref Inflation Link is currently generating about -0.22 per unit of volatility. If you would invest  1,056  in Tiaa Cref Inflation Link on October 12, 2024 and sell it today you would lose (8.00) from holding Tiaa Cref Inflation Link or give up 0.76% of portfolio value over 90 days.

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

Inflation Protected Bond Fund  vs.  Tiaa Cref Inflation Link

Inflation Protected

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inflation Protected Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Inflation-protected 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

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 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Inflation-protected and Tiaa Cref

The main advantage of trading using opposite Inflation-protected and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation-protected 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 Inflation Protected 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.