Correlation Between Tiaa-cref High-yield and Brandes Core

Can any of the company-specific risk be diversified away by investing in both Tiaa-cref High-yield and Brandes Core 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 Brandes Core 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 Brandes E Plus, you can compare the effects of market volatilities on Tiaa-cref High-yield and Brandes Core 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 Brandes Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref High-yield and Brandes Core.

Diversification Opportunities for Tiaa-cref High-yield and Brandes Core

0.47

Correlation Coefficient

Tiaa-cref High-yield  Brandes Core

Very weak diversification

The 3 months correlation between Tiaa-cref and Brandes is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref High Yield Fund and Brandes E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes E Plus 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 Brandes Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes E Plus has no effect on the direction of Tiaa-cref High-yield i.e., Tiaa-cref High-yield and Brandes Core go up and down completely randomly.

Pair Corralation between Tiaa-cref High-yield and Brandes Core

Assuming the 90 days horizon Tiaa-cref High-yield is expected to generate 1.79 times less return on investment than Brandes Core. But when comparing it to its historical volatility, Tiaa Cref High Yield Fund is 1.31 times less risky than Brandes Core. It trades about 0.12 of its potential returns per unit of risk. Brandes E Plus is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  819.00  in Brandes E Plus on December 22, 2024 and sell it today you would earn a total of  22.00  from holding Brandes E Plus or generate 2.69% return on investment over 90 days.

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

Tiaa Cref High Yield Fund  vs.  Brandes E Plus

Tiaa-cref High-yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref High Yield Fund are ranked lower than 9 (%) 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.

Brandes E Plus

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brandes E Plus are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Brandes Core 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 Brandes Core

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

The idea behind Tiaa Cref High Yield Fund and Brandes E Plus 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.