Correlation Between Kinetics Small and Tiaa Cref

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

By analyzing existing cross correlation between Kinetics Small Cap and Tiaa Cref Lifecycle Index, you can compare the effects of market volatilities on Kinetics Small 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 Kinetics Small with a short position of Tiaa Cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Tiaa Cref.

Diversification Opportunities for Kinetics Small and Tiaa Cref

0.06

Correlation Coefficient

Kinetics Small  Tiaa Cref

Significant diversification

The 3 months correlation between Kinetics and Tiaa is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Tiaa Cref Lifecycle Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifecycle and Kinetics Small 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 Kinetics Small Cap 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 Lifecycle has no effect on the direction of Kinetics Small i.e., Kinetics Small and Tiaa Cref go up and down completely randomly.

Pair Corralation between Kinetics Small and Tiaa Cref

Assuming the 90 days horizon Kinetics Small Cap is expected to under-perform the Tiaa Cref. In addition to that, Kinetics Small is 2.32 times more volatile than Tiaa Cref Lifecycle Index. It trades about -0.09 of its total potential returns per unit of risk. Tiaa Cref Lifecycle Index is currently generating about -0.17 per unit of volatility. If you would invest  2,013  in Tiaa Cref Lifecycle Index on September 15, 2024 and sell it today you would lose (106.00) from holding Tiaa Cref Lifecycle Index or give up 5.27% of portfolio value over 90 days.

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

Kinetics Small Cap  vs.  Tiaa Cref Lifecycle Index

Kinetics Small Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small showed solid returns over the last few months and may actually be approaching a breakup point.

Tiaa Cref Lifecycle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiaa Cref Lifecycle Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Kinetics Small and Tiaa Cref

The main advantage of trading using opposite Kinetics Small and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small 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 Kinetics Small Cap and Tiaa Cref Lifecycle Index 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 Valuation module to check real value of public entities based on technical and fundamental data.