Correlation Between Tiaa-cref Small-cap and Hennessy Technology

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

Diversification Opportunities for Tiaa-cref Small-cap and Hennessy Technology

0.95

Correlation Coefficient

Tiaa-cref Small-cap  Hennessy Technology

Almost no diversification

The 3 months correlation between Tiaa-cref and Hennessy is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Small Cap Blend and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology 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 Hennessy Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Technology has no effect on the direction of Tiaa-cref Small-cap i.e., Tiaa-cref Small-cap and Hennessy Technology go up and down completely randomly.

Pair Corralation between Tiaa-cref Small-cap and Hennessy Technology

Assuming the 90 days horizon Tiaa Cref Small Cap Blend is expected to under-perform the Hennessy Technology. But the mutual fund apears to be less risky and, when comparing its historical volatility, Tiaa Cref Small Cap Blend is 1.2 times less risky than Hennessy Technology. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Hennessy Technology Fund is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,278  in Hennessy Technology Fund on December 30, 2024 and sell it today you would lose (198.00) from holding Hennessy Technology Fund or give up 8.69% of portfolio value over 90 days.

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

Tiaa Cref Small Cap Blend  vs.  Hennessy Technology Fund

Tiaa-cref Small-cap

Risk-Adjusted Performance

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 latest weak performance, the Fund's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Hennessy Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hennessy Technology Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Tiaa-cref Small-cap and Hennessy Technology

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

The idea behind Tiaa Cref Small Cap Blend and Hennessy Technology 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.