Correlation Between Tiaa Cref and Federated Emerging

Can any of the company-specific risk be diversified away by investing in both Tiaa Cref and Federated Emerging 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 Federated Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tiaa Cref Smallmid Cap Equity and Federated Emerging Market, you can compare the effects of market volatilities on Tiaa Cref and Federated Emerging 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 Federated Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa Cref and Federated Emerging.

Diversification Opportunities for Tiaa Cref and Federated Emerging

-0.22

Correlation Coefficient

Tiaa Cref  Federated Emerging

Very good diversification

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

Pair Corralation between Tiaa Cref and Federated Emerging

Assuming the 90 days horizon Tiaa Cref Smallmid Cap Equity is expected to generate 2.97 times more return on investment than Federated Emerging. However, Tiaa Cref is 2.97 times more volatile than Federated Emerging Market. It trades about 0.08 of its potential returns per unit of risk. Federated Emerging Market is currently generating about 0.11 per unit of risk. If you would invest  1,199  in Tiaa Cref Smallmid Cap Equity on September 3, 2024 and sell it today you would earn a total of  589.00  from holding Tiaa Cref Smallmid Cap Equity or generate 49.12% return on investment over 90 days.

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

Tiaa Cref Smallmid Cap Equity  vs.  Federated Emerging Market

Tiaa Cref Smallmid

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Smallmid Cap Equity are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Tiaa Cref showed solid returns over the last few months and may actually be approaching a breakup point.

Federated Emerging Market

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Emerging Market are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Federated Emerging 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 Federated Emerging

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

The idea behind Tiaa Cref Smallmid Cap Equity and Federated Emerging Market 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.