Correlation Between Nasdaq and Tiaa Cref

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

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

Diversification Opportunities for Nasdaq and Tiaa Cref

0.87

Correlation Coefficient

Nasdaq  Tiaa Cref

Very poor diversification

The 3 months correlation between Nasdaq and Tiaa is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Tiaa Cref Equity Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Equity and Nasdaq 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 Nasdaq Inc 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 Equity has no effect on the direction of Nasdaq i.e., Nasdaq and Tiaa Cref go up and down completely randomly.

Pair Corralation between Nasdaq and Tiaa Cref

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 1.33 times more return on investment than Tiaa Cref. However, Nasdaq is 1.33 times more volatile than Tiaa Cref Equity Index. It trades about 0.18 of its potential returns per unit of risk. Tiaa Cref Equity Index is currently generating about 0.17 per unit of risk. If you would invest  7,212  in Nasdaq Inc on September 12, 2024 and sell it today you would earn a total of  831.00  from holding Nasdaq Inc or generate 11.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Nasdaq Inc  vs.  Tiaa Cref Equity Index

Nasdaq Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tiaa Cref Equity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Equity Index are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tiaa Cref may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nasdaq and Tiaa Cref

The main advantage of trading using opposite Nasdaq and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc and Tiaa Cref Equity 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.