Correlation Between Tiaa-cref Small-cap and Great-west Real

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

Diversification Opportunities for Tiaa-cref Small-cap and Great-west Real

0.71

Correlation Coefficient

Tiaa-cref Small-cap  Great-west Real

Poor diversification

The 3 months correlation between Tiaa-cref and Great-west is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Small Cap Blend and Great West Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Real 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 Great-west Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Real has no effect on the direction of Tiaa-cref Small-cap i.e., Tiaa-cref Small-cap and Great-west Real go up and down completely randomly.

Pair Corralation between Tiaa-cref Small-cap and Great-west Real

Assuming the 90 days horizon Tiaa Cref Small Cap Blend is expected to generate 1.1 times more return on investment than Great-west Real. However, Tiaa-cref Small-cap is 1.1 times more volatile than Great West Real Estate. It trades about 0.03 of its potential returns per unit of risk. Great West Real Estate is currently generating about 0.02 per unit of risk. If you would invest  2,057  in Tiaa Cref Small Cap Blend on October 11, 2024 and sell it today you would earn a total of  330.00  from holding Tiaa Cref Small Cap Blend or generate 16.04% return on investment over 90 days.

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

Tiaa Cref Small Cap Blend  vs.  Great West Real Estate

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.

Great West Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and 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 Great-west Real

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

The idea behind Tiaa Cref Small Cap Blend and Great West Real Estate 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.