Correlation Between Tiaa-cref Small-cap and Consumer Services

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

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

Diversification Opportunities for Tiaa-cref Small-cap and Consumer Services

-0.06

Correlation Coefficient

Tiaa-cref Small-cap  Consumer Services

Good diversification

The 3 months correlation between Tiaa-cref and Consumer is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Small Cap Blend and Consumer Services Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Services and Tiaa-cref Small-cap 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 Small Cap Blend are associated (or correlated) with Consumer Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Services has no effect on the direction of Tiaa-cref Small-cap i.e., Tiaa-cref Small-cap and Consumer Services go up and down completely randomly.

Pair Corralation between Tiaa-cref Small-cap and Consumer Services

Assuming the 90 days horizon Tiaa Cref Small Cap Blend is expected to under-perform the Consumer Services. But the mutual fund apears to be less risky and, when comparing its historical volatility, Tiaa Cref Small Cap Blend is 1.41 times less risky than Consumer Services. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Consumer Services Ultrasector is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  6,233  in Consumer Services Ultrasector on October 20, 2024 and sell it today you would earn a total of  1,443  from holding Consumer Services Ultrasector or generate 23.15% return on investment over 90 days.

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

Tiaa Cref Small Cap Blend  vs.  Consumer Services Ultrasector

Tiaa-cref Small-cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiaa Cref Small Cap Blend has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Tiaa-cref Small-cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Consumer Services

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Consumer Services Ultrasector are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Consumer Services showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tiaa-cref Small-cap and Consumer Services

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

The idea behind Tiaa Cref Small Cap Blend and Consumer Services Ultrasector 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.