Correlation Between Midcap Growth and Tiaa Cref

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

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

Diversification Opportunities for Midcap Growth and Tiaa Cref

0.84

Correlation Coefficient

Midcap Growth  Tiaa Cref

Very poor diversification

The 3 months correlation between Midcap and Tiaa is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Midcap Growth Fund and Tiaa Cref Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Real and Midcap Growth 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 Midcap Growth Fund 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 Real has no effect on the direction of Midcap Growth i.e., Midcap Growth and Tiaa Cref go up and down completely randomly.

Pair Corralation between Midcap Growth and Tiaa Cref

Assuming the 90 days horizon Midcap Growth Fund is expected to under-perform the Tiaa Cref. In addition to that, Midcap Growth is 2.49 times more volatile than Tiaa Cref Real Estate. It trades about -0.03 of its total potential returns per unit of risk. Tiaa Cref Real Estate is currently generating about 0.02 per unit of volatility. If you would invest  1,716  in Tiaa Cref Real Estate on October 11, 2024 and sell it today you would earn a total of  152.00  from holding Tiaa Cref Real Estate or generate 8.86% return on investment over 90 days.

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

Midcap Growth Fund  vs.  Tiaa Cref Real Estate

Midcap Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Midcap Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward-looking indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Tiaa Cref Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiaa Cref Real Estate 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 Midcap Growth and Tiaa Cref

The main advantage of trading using opposite Midcap Growth and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midcap Growth 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 Midcap Growth Fund and Tiaa Cref Real Estate 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.