Correlation Between Tiaa-cref Lifestyle and Icon Long/short

Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Lifestyle and Icon Long/short 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 Lifestyle and Icon Long/short into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tiaa Cref Lifestyle Moderate and Icon Longshort Fund, you can compare the effects of market volatilities on Tiaa-cref Lifestyle and Icon Long/short 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 Lifestyle with a short position of Icon Long/short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Lifestyle and Icon Long/short.

Diversification Opportunities for Tiaa-cref Lifestyle and Icon Long/short

0.38

Correlation Coefficient

Tiaa-cref Lifestyle  Icon Long/short

Weak diversification

The 3 months correlation between Tiaa-cref and Icon is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Lifestyle Moderate and Icon Longshort Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Long/short and Tiaa-cref Lifestyle 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 Lifestyle Moderate are associated (or correlated) with Icon Long/short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Long/short has no effect on the direction of Tiaa-cref Lifestyle i.e., Tiaa-cref Lifestyle and Icon Long/short go up and down completely randomly.

Pair Corralation between Tiaa-cref Lifestyle and Icon Long/short

Assuming the 90 days horizon Tiaa-cref Lifestyle is expected to generate 1.68 times less return on investment than Icon Long/short. But when comparing it to its historical volatility, Tiaa Cref Lifestyle Moderate is 1.66 times less risky than Icon Long/short. It trades about 0.16 of its potential returns per unit of risk. Icon Longshort Fund is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,675  in Icon Longshort Fund on October 27, 2024 and sell it today you would earn a total of  72.00  from holding Icon Longshort Fund or generate 2.69% return on investment over 90 days.

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

Tiaa Cref Lifestyle Moderate  vs.  Icon Longshort Fund

Tiaa Cref Lifestyle

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Lifestyle Moderate are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Tiaa-cref Lifestyle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Icon Long/short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icon Longshort Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Icon Long/short 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 Lifestyle and Icon Long/short

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

The idea behind Tiaa Cref Lifestyle Moderate and Icon Longshort 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.