Correlation Between Tiaa-cref High-yield and Upright Growth

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

Diversification Opportunities for Tiaa-cref High-yield and Upright Growth

0.5

Correlation Coefficient

Tiaa-cref High-yield  Upright Growth

Very weak diversification

The 3 months correlation between Tiaa-cref and Upright is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref High Yield Fund and Upright Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upright Growth 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 Upright Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upright Growth has no effect on the direction of Tiaa-cref High-yield i.e., Tiaa-cref High-yield and Upright Growth go up and down completely randomly.

Pair Corralation between Tiaa-cref High-yield and Upright Growth

Assuming the 90 days horizon Tiaa-cref High-yield is expected to generate 27.88 times less return on investment than Upright Growth. But when comparing it to its historical volatility, Tiaa Cref High Yield Fund is 10.51 times less risky than Upright Growth. It trades about 0.1 of its potential returns per unit of risk. Upright Growth Fund is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  954.00  in Upright Growth Fund on October 26, 2024 and sell it today you would earn a total of  262.00  from holding Upright Growth Fund or generate 27.46% 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.  Upright Growth Fund

Tiaa-cref High-yield

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref High Yield Fund are ranked lower than 12 (%) 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.

Upright Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Upright Growth Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Upright Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tiaa-cref High-yield and Upright Growth

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

The idea behind Tiaa Cref High Yield Fund and Upright Growth 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.