Correlation Between Tiaa Cref and Preferred Securities

Can any of the company-specific risk be diversified away by investing in both Tiaa Cref and Preferred Securities 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 and Preferred Securities 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 Preferred Securities Fund, you can compare the effects of market volatilities on Tiaa Cref and Preferred Securities 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 with a short position of Preferred Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa Cref and Preferred Securities.

Diversification Opportunities for Tiaa Cref and Preferred Securities

-0.22

Correlation Coefficient

Tiaa Cref  Preferred Securities

Very good diversification

The 3 months correlation between Tiaa and Preferred is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Small Cap Blend and Preferred Securities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preferred Securities and Tiaa Cref 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 Preferred Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preferred Securities has no effect on the direction of Tiaa Cref i.e., Tiaa Cref and Preferred Securities go up and down completely randomly.

Pair Corralation between Tiaa Cref and Preferred Securities

Assuming the 90 days horizon Tiaa Cref Small Cap Blend is expected to under-perform the Preferred Securities. In addition to that, Tiaa Cref is 12.13 times more volatile than Preferred Securities Fund. It trades about -0.29 of its total potential returns per unit of risk. Preferred Securities Fund is currently generating about 0.28 per unit of volatility. If you would invest  921.00  in Preferred Securities Fund on December 4, 2024 and sell it today you would earn a total of  5.00  from holding Preferred Securities Fund or generate 0.54% 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.  Preferred Securities Fund

Tiaa Cref Small

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 weak performance in the last few months, the Fund's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Preferred Securities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Preferred Securities Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Preferred Securities 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 and Preferred Securities

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

The idea behind Tiaa Cref Small Cap Blend and Preferred Securities 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 Transaction History module to view history of all your transactions and understand their impact on performance.