Correlation Between Tiaa-cref and Hunter Small

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

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

Diversification Opportunities for Tiaa-cref and Hunter Small

0.93

Correlation Coefficient

Tiaa-cref  Hunter Small

Almost no diversification

The 3 months correlation between Tiaa-cref and Hunter is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Sp 500 and Hunter Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunter Small Cap and Tiaa-cref 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 Sp 500 are associated (or correlated) with Hunter Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunter Small Cap has no effect on the direction of Tiaa-cref i.e., Tiaa-cref and Hunter Small go up and down completely randomly.

Pair Corralation between Tiaa-cref and Hunter Small

Assuming the 90 days horizon Tiaa Cref Sp 500 is expected to generate 1.06 times more return on investment than Hunter Small. However, Tiaa-cref is 1.06 times more volatile than Hunter Small Cap. It trades about -0.08 of its potential returns per unit of risk. Hunter Small Cap is currently generating about -0.09 per unit of risk. If you would invest  6,508  in Tiaa Cref Sp 500 on December 21, 2024 and sell it today you would lose (313.00) from holding Tiaa Cref Sp 500 or give up 4.81% of portfolio value over 90 days.

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

Tiaa Cref Sp 500  vs.  Hunter Small Cap

Tiaa Cref Sp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tiaa Cref Sp 500 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.

Hunter Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hunter Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Hunter Small 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 and Hunter Small

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

The idea behind Tiaa Cref Sp 500 and Hunter Small Cap 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.