Correlation Between Kansas Municipal and Tiaa-cref Small-cap

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

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

Diversification Opportunities for Kansas Municipal and Tiaa-cref Small-cap

0.44

Correlation Coefficient

Kansas Municipal  Tiaa-cref Small-cap

Very weak diversification

The 3 months correlation between Kansas and Tiaa-cref is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kansas Municipal Fund 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-cap and Kansas Municipal 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 Kansas Municipal Fund are associated (or correlated) with Tiaa-cref Small-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 Small-cap has no effect on the direction of Kansas Municipal i.e., Kansas Municipal and Tiaa-cref Small-cap go up and down completely randomly.

Pair Corralation between Kansas Municipal and Tiaa-cref Small-cap

Assuming the 90 days horizon Kansas Municipal Fund is expected to under-perform the Tiaa-cref Small-cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Kansas Municipal Fund is 4.33 times less risky than Tiaa-cref Small-cap. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Tiaa Cref Small Cap Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,865  in Tiaa Cref Small Cap Equity on October 27, 2024 and sell it today you would earn a total of  39.00  from holding Tiaa Cref Small Cap Equity or generate 2.09% return on investment over 90 days.

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

Kansas Municipal Fund  vs.  Tiaa Cref Small Cap Equity

Kansas Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tiaa-cref Small-cap

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 fairly strong basic indicators, Tiaa-cref Small-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 Kansas Municipal and Tiaa-cref Small-cap

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

The idea behind Kansas Municipal Fund 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.