Correlation Between Tiaa-cref Lifestyle and Target Retirement

Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Lifestyle and Target Retirement 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 Target Retirement 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 Target Retirement 2040, you can compare the effects of market volatilities on Tiaa-cref Lifestyle and Target Retirement 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 Target Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Lifestyle and Target Retirement.

Diversification Opportunities for Tiaa-cref Lifestyle and Target Retirement

0.98

Correlation Coefficient

Tiaa-cref Lifestyle  Target Retirement

Almost no diversification

The 3 months correlation between Tiaa-cref and Target is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Lifestyle Moderate and Target Retirement 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Retirement 2040 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 Target Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Retirement 2040 has no effect on the direction of Tiaa-cref Lifestyle i.e., Tiaa-cref Lifestyle and Target Retirement go up and down completely randomly.

Pair Corralation between Tiaa-cref Lifestyle and Target Retirement

Assuming the 90 days horizon Tiaa Cref Lifestyle Moderate is expected to under-perform the Target Retirement. But the mutual fund apears to be less risky and, when comparing its historical volatility, Tiaa Cref Lifestyle Moderate is 1.07 times less risky than Target Retirement. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Target Retirement 2040 is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,297  in Target Retirement 2040 on December 29, 2024 and sell it today you would earn a total of  3.00  from holding Target Retirement 2040 or generate 0.23% return on investment over 90 days.

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

Tiaa Cref Lifestyle Moderate  vs.  Target Retirement 2040

Tiaa Cref Lifestyle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tiaa Cref Lifestyle Moderate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential 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.

Target Retirement 2040

Risk-Adjusted Performance

Very Weak

Over the last 90 days Target Retirement 2040 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Target Retirement 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 Target Retirement

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

The idea behind Tiaa Cref Lifestyle Moderate and Target Retirement 2040 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.