Correlation Between Tiaa-cref Inflation-linked and Payden Emerging

Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Inflation-linked and Payden Emerging 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 Payden Emerging 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 Payden Emerging Markets, you can compare the effects of market volatilities on Tiaa-cref Inflation-linked and Payden Emerging 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 Payden Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Inflation-linked and Payden Emerging.

Diversification Opportunities for Tiaa-cref Inflation-linked and Payden Emerging

0.56

Correlation Coefficient

Tiaa-cref Inflation-linked  Payden Emerging

Very weak diversification

The 3 months correlation between Tiaa-cref and Payden is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Inflation Linked Bon and Payden Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Emerging Markets 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 Payden Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Emerging Markets has no effect on the direction of Tiaa-cref Inflation-linked i.e., Tiaa-cref Inflation-linked and Payden Emerging go up and down completely randomly.

Pair Corralation between Tiaa-cref Inflation-linked and Payden Emerging

Assuming the 90 days horizon Tiaa-cref Inflation-linked is expected to generate 49.0 times less return on investment than Payden Emerging. In addition to that, Tiaa-cref Inflation-linked is 1.3 times more volatile than Payden Emerging Markets. It trades about 0.0 of its total potential returns per unit of risk. Payden Emerging Markets is currently generating about 0.07 per unit of volatility. If you would invest  873.00  in Payden Emerging Markets on October 25, 2024 and sell it today you would earn a total of  5.00  from holding Payden Emerging Markets or generate 0.57% return on investment over 90 days.

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

Tiaa Cref Inflation Linked Bon  vs.  Payden Emerging Markets

Tiaa-cref Inflation-linked

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiaa Cref Inflation Linked Bond has generated negative risk-adjusted returns adding no value to fund investors. 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.

Payden Emerging Markets

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Payden Emerging Markets are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Payden Emerging 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 Payden Emerging

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

The idea behind Tiaa Cref Inflation Linked Bond and Payden Emerging Markets 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 CEOs Directory module to screen CEOs from public companies around the world.