Correlation Between Tiaa-cref High-yield and Salient Adaptive

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

By analyzing existing cross correlation between Tiaa Cref High Yield Fund and Salient Adaptive Equity, you can compare the effects of market volatilities on Tiaa-cref High-yield and Salient Adaptive 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 High-yield with a short position of Salient Adaptive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref High-yield and Salient Adaptive.

Diversification Opportunities for Tiaa-cref High-yield and Salient Adaptive

0.85

Correlation Coefficient

Tiaa-cref High-yield  Salient Adaptive

Very poor diversification

The 3 months correlation between Tiaa-cref and Salient is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref High Yield Fund and Salient Adaptive Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Adaptive Equity and Tiaa-cref High-yield 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 High Yield Fund are associated (or correlated) with Salient Adaptive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Adaptive Equity has no effect on the direction of Tiaa-cref High-yield i.e., Tiaa-cref High-yield and Salient Adaptive go up and down completely randomly.

Pair Corralation between Tiaa-cref High-yield and Salient Adaptive

Assuming the 90 days horizon Tiaa Cref High Yield Fund is expected to generate 1.18 times more return on investment than Salient Adaptive. However, Tiaa-cref High-yield is 1.18 times more volatile than Salient Adaptive Equity. It trades about 0.1 of its potential returns per unit of risk. Salient Adaptive Equity is currently generating about 0.1 per unit of risk. If you would invest  869.00  in Tiaa Cref High Yield Fund on December 21, 2024 and sell it today you would earn a total of  10.00  from holding Tiaa Cref High Yield Fund or generate 1.15% return on investment over 90 days.

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

Tiaa Cref High Yield Fund  vs.  Salient Adaptive Equity

Tiaa-cref High-yield

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref High Yield Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tiaa-cref High-yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Salient Adaptive Equity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salient Adaptive Equity are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Salient Adaptive 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 High-yield and Salient Adaptive

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

The idea behind Tiaa Cref High Yield Fund and Salient Adaptive Equity 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.