Correlation Between Western Asset and Tiaa Cref

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

By analyzing existing cross correlation between Western Asset Smash and Tiaa Cref Lifestyle Moderate, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Tiaa Cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Tiaa Cref.

Diversification Opportunities for Western Asset and Tiaa Cref

-0.25

Correlation Coefficient

Western Asset  Tiaa Cref

Very good diversification

The 3 months correlation between Western and Tiaa is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Smash and Tiaa Cref Lifestyle Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifestyle and Western Asset 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 Western Asset Smash 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 Lifestyle has no effect on the direction of Western Asset i.e., Western Asset and Tiaa Cref go up and down completely randomly.

Pair Corralation between Western Asset and Tiaa Cref

Assuming the 90 days horizon Western Asset Smash is expected to under-perform the Tiaa Cref. In addition to that, Western Asset is 1.29 times more volatile than Tiaa Cref Lifestyle Moderate. It trades about -0.11 of its total potential returns per unit of risk. Tiaa Cref Lifestyle Moderate is currently generating about 0.11 per unit of volatility. If you would invest  1,485  in Tiaa Cref Lifestyle Moderate on September 2, 2024 and sell it today you would earn a total of  45.00  from holding Tiaa Cref Lifestyle Moderate or generate 3.03% return on investment over 90 days.

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

Western Asset Smash  vs.  Tiaa Cref Lifestyle Moderate

Western Asset Smash

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tiaa Cref Lifestyle

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Lifestyle Moderate are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential 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 Western Asset and Tiaa Cref

The main advantage of trading using opposite Western Asset and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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 Western Asset Smash and Tiaa Cref Lifestyle Moderate 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.