Correlation Between Sierra Core and Tiaa-cref

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

By analyzing existing cross correlation between Sierra E Retirement and Tiaa Cref Sp 500, you can compare the effects of market volatilities on Sierra Core 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 Sierra Core with a short position of Tiaa-cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Core and Tiaa-cref.

Diversification Opportunities for Sierra Core and Tiaa-cref

0.75

Correlation Coefficient

Sierra Core  Tiaa-cref

Poor diversification

The 3 months correlation between Sierra and Tiaa-cref is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sierra E Retirement and Tiaa Cref Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Sp and Sierra Core 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 Sierra E Retirement 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 Sp has no effect on the direction of Sierra Core i.e., Sierra Core and Tiaa-cref go up and down completely randomly.

Pair Corralation between Sierra Core and Tiaa-cref

Assuming the 90 days horizon Sierra Core is expected to generate 1.02 times less return on investment than Tiaa-cref. But when comparing it to its historical volatility, Sierra E Retirement is 2.09 times less risky than Tiaa-cref. It trades about 0.17 of its potential returns per unit of risk. Tiaa Cref Sp 500 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,508  in Tiaa Cref Sp 500 on October 24, 2024 and sell it today you would earn a total of  87.00  from holding Tiaa Cref Sp 500 or generate 1.34% return on investment over 90 days.

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

Sierra E Retirement  vs.  Tiaa Cref Sp 500

Sierra E Retirement

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sierra E Retirement are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sierra Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tiaa Cref Sp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Sp 500 are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. 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 Sierra Core and Tiaa-cref

The main advantage of trading using opposite Sierra Core and Tiaa-cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sierra Core 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 Sierra E Retirement and Tiaa Cref Sp 500 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.