Correlation Between Tiaa Cref and Nasdaq-100(r)

Can any of the company-specific risk be diversified away by investing in both Tiaa Cref and Nasdaq-100(r) 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 Nasdaq-100(r) 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 Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Tiaa Cref and Nasdaq-100(r) 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 Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa Cref and Nasdaq-100(r).

Diversification Opportunities for Tiaa Cref and Nasdaq-100(r)

0.56

Correlation Coefficient

Tiaa Cref  Nasdaq-100(r)

Very weak diversification

The 3 months correlation between Tiaa and Nasdaq-100(r) is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Small Cap Blend and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x 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 Nasdaq-100(r). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Tiaa Cref i.e., Tiaa Cref and Nasdaq-100(r) go up and down completely randomly.

Pair Corralation between Tiaa Cref and Nasdaq-100(r)

Assuming the 90 days horizon Tiaa Cref Small Cap Blend is expected to under-perform the Nasdaq-100(r). But the mutual fund apears to be less risky and, when comparing its historical volatility, Tiaa Cref Small Cap Blend is 1.72 times less risky than Nasdaq-100(r). The mutual fund trades about -0.18 of its potential returns per unit of risk. The Nasdaq 100 2x Strategy is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  41,345  in Nasdaq 100 2x Strategy on October 7, 2024 and sell it today you would lose (1,498) from holding Nasdaq 100 2x Strategy or give up 3.62% 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.  Nasdaq 100 2x Strategy

Tiaa Cref Small

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 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nasdaq 100 2x

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Nasdaq-100(r) may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tiaa Cref and Nasdaq-100(r)

The main advantage of trading using opposite Tiaa Cref and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiaa Cref position performs unexpectedly, Nasdaq-100(r) 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 Nasdaq-100(r) will offset losses from the drop in Nasdaq-100(r)'s long position.

The idea behind Tiaa Cref Small Cap Blend and Nasdaq 100 2x Strategy 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.