Correlation Between Tiaa-cref Small/mid-cap and Inverse Russell

Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Small/mid-cap and Inverse Russell 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 Small/mid-cap and Inverse Russell 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 Inverse Russell 2000, you can compare the effects of market volatilities on Tiaa-cref Small/mid-cap and Inverse Russell 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 Small/mid-cap with a short position of Inverse Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Small/mid-cap and Inverse Russell.

Diversification Opportunities for Tiaa-cref Small/mid-cap and Inverse Russell

-0.83

Correlation Coefficient

Tiaa-cref Small/mid-cap  Inverse Russell

Pay attention - limited upside

The 3 months correlation between Tiaa-cref and Inverse is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Smallmid Cap Equity and Inverse Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Russell 2000 and Tiaa-cref Small/mid-cap 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 Inverse Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Russell 2000 has no effect on the direction of Tiaa-cref Small/mid-cap i.e., Tiaa-cref Small/mid-cap and Inverse Russell go up and down completely randomly.

Pair Corralation between Tiaa-cref Small/mid-cap and Inverse Russell

Assuming the 90 days horizon Tiaa Cref Smallmid Cap Equity is expected to under-perform the Inverse Russell. In addition to that, Tiaa-cref Small/mid-cap is 1.03 times more volatile than Inverse Russell 2000. It trades about -0.06 of its total potential returns per unit of risk. Inverse Russell 2000 is currently generating about 0.14 per unit of volatility. If you would invest  13,638  in Inverse Russell 2000 on December 29, 2024 and sell it today you would earn a total of  1,464  from holding Inverse Russell 2000 or generate 10.73% return on investment over 90 days.

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

Tiaa Cref Smallmid Cap Equity  vs.  Inverse Russell 2000

Tiaa-cref Small/mid-cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tiaa Cref Smallmid Cap Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Tiaa-cref Small/mid-cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Inverse Russell 2000

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inverse Russell 2000 are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Inverse Russell may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tiaa-cref Small/mid-cap and Inverse Russell

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

The idea behind Tiaa Cref Smallmid Cap Equity and Inverse Russell 2000 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.