Correlation Between Tiaa-cref Real and Financial Services

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

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

Diversification Opportunities for Tiaa-cref Real and Financial Services

0.15

Correlation Coefficient

Tiaa-cref Real  Financial Services

Average diversification

The 3 months correlation between Tiaa-cref and Financial is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Real Estate and Financial Services Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Services and Tiaa-cref Real 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 Real Estate are associated (or correlated) with Financial Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Services has no effect on the direction of Tiaa-cref Real i.e., Tiaa-cref Real and Financial Services go up and down completely randomly.

Pair Corralation between Tiaa-cref Real and Financial Services

Assuming the 90 days horizon Tiaa-cref Real is expected to generate 3.58 times less return on investment than Financial Services. But when comparing it to its historical volatility, Tiaa Cref Real Estate is 1.11 times less risky than Financial Services. It trades about 0.07 of its potential returns per unit of risk. Financial Services Fund is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  8,263  in Financial Services Fund on September 2, 2024 and sell it today you would earn a total of  1,127  from holding Financial Services Fund or generate 13.64% return on investment over 90 days.

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

Tiaa Cref Real Estate  vs.  Financial Services Fund

Tiaa Cref Real

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Real Estate are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Tiaa-cref Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Financial Services

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Financial Services Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Financial Services showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tiaa-cref Real and Financial Services

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

The idea behind Tiaa Cref Real Estate and Financial Services Fund 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.