Correlation Between Tiaa-cref Inflation-linked and Federated Real

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

By analyzing existing cross correlation between Tiaa Cref Inflation Linked Bond and Federated Real Return, you can compare the effects of market volatilities on Tiaa-cref Inflation-linked and Federated Real 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 Tiaa-cref Inflation-linked with a short position of Federated Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Inflation-linked and Federated Real.

Diversification Opportunities for Tiaa-cref Inflation-linked and Federated Real

0.9

Correlation Coefficient

Tiaa-cref Inflation-linked  Federated Real

Almost no diversification

The 3 months correlation between Tiaa-cref and Federated is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Inflation Linked Bon and Federated Real Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Real Return and Tiaa-cref Inflation-linked 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 Tiaa Cref Inflation Linked Bond are associated (or correlated) with Federated Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Real Return has no effect on the direction of Tiaa-cref Inflation-linked i.e., Tiaa-cref Inflation-linked and Federated Real go up and down completely randomly.

Pair Corralation between Tiaa-cref Inflation-linked and Federated Real

Assuming the 90 days horizon Tiaa-cref Inflation-linked is expected to generate 1.02 times less return on investment than Federated Real. But when comparing it to its historical volatility, Tiaa Cref Inflation Linked Bond is 1.42 times less risky than Federated Real. It trades about 0.26 of its potential returns per unit of risk. Federated Real Return is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  930.00  in Federated Real Return on December 27, 2024 and sell it today you would earn a total of  29.00  from holding Federated Real Return or generate 3.12% return on investment over 90 days.

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

Tiaa Cref Inflation Linked Bon  vs.  Federated Real Return

Tiaa-cref Inflation-linked

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Inflation Linked Bond are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Tiaa-cref Inflation-linked is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated Real Return

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Real Return are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Federated Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tiaa-cref Inflation-linked and Federated Real

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

The idea behind Tiaa Cref Inflation Linked Bond and Federated Real Return 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..