Correlation Between Tiaa-cref Small-cap and First Eagle

Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Small-cap and First Eagle 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 First Eagle 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 First Eagle Global, you can compare the effects of market volatilities on Tiaa-cref Small-cap and First Eagle 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 First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Small-cap and First Eagle.

Diversification Opportunities for Tiaa-cref Small-cap and First Eagle

0.55

Correlation Coefficient

Tiaa-cref Small-cap  First Eagle

Very weak diversification

The 3 months correlation between Tiaa-cref and First is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Small Cap Blend and First Eagle Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Global 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 First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Global has no effect on the direction of Tiaa-cref Small-cap i.e., Tiaa-cref Small-cap and First Eagle go up and down completely randomly.

Pair Corralation between Tiaa-cref Small-cap and First Eagle

Assuming the 90 days horizon Tiaa Cref Small Cap Blend is expected to generate 3.53 times more return on investment than First Eagle. However, Tiaa-cref Small-cap is 3.53 times more volatile than First Eagle Global. It trades about -0.01 of its potential returns per unit of risk. First Eagle Global is currently generating about -0.22 per unit of risk. If you would invest  2,434  in Tiaa Cref Small Cap Blend on October 10, 2024 and sell it today you would lose (47.00) from holding Tiaa Cref Small Cap Blend or give up 1.93% of portfolio value over 90 days.

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

Tiaa Cref Small Cap Blend  vs.  First Eagle Global

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.

First Eagle Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Eagle Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, First Eagle 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 Small-cap and First Eagle

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

The idea behind Tiaa Cref Small Cap Blend and First Eagle Global 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.