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 Small Cap Equity, 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

0.67

Correlation Coefficient

Kinetics Small  Tiaa Cref

Poor diversification

The 3 months correlation between Kinetics and Tiaa is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Tiaa Cref Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Small 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 Small 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 1.81 times more volatile than Tiaa Cref Small Cap Equity. It trades about -0.1 of its total potential returns per unit of risk. Tiaa Cref Small Cap Equity is currently generating about -0.16 per unit of volatility. If you would invest  1,933  in Tiaa Cref Small Cap Equity on October 11, 2024 and sell it today you would lose (80.00) from holding Tiaa Cref Small Cap Equity or give up 4.14% of portfolio value over 90 days.

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

Kinetics Small Cap  vs.  Tiaa Cref Small Cap Equity

Kinetics Small Cap

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tiaa Cref Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiaa Cref Small Cap Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund 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 Small Cap Equity 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.