Correlation Between Tiaa-cref Small/mid-cap and Miller Opportunity

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

Diversification Opportunities for Tiaa-cref Small/mid-cap and Miller Opportunity

0.37

Correlation Coefficient

Tiaa-cref Small/mid-cap  Miller Opportunity

Weak diversification

The 3 months correlation between Tiaa-cref and Miller is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Smallmid Cap Equity and Miller Opportunity Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Opportunity Trust 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 Miller Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Opportunity Trust has no effect on the direction of Tiaa-cref Small/mid-cap i.e., Tiaa-cref Small/mid-cap and Miller Opportunity go up and down completely randomly.

Pair Corralation between Tiaa-cref Small/mid-cap and Miller Opportunity

Assuming the 90 days horizon Tiaa Cref Smallmid Cap Equity is expected to under-perform the Miller Opportunity. But the mutual fund apears to be less risky and, when comparing its historical volatility, Tiaa Cref Smallmid Cap Equity is 1.1 times less risky than Miller Opportunity. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Miller Opportunity Trust is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  4,090  in Miller Opportunity Trust on October 8, 2024 and sell it today you would lose (79.00) from holding Miller Opportunity Trust or give up 1.93% of portfolio value over 90 days.

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

Tiaa Cref Smallmid Cap Equity  vs.  Miller Opportunity Trust

Tiaa-cref Small/mid-cap

Risk-Adjusted Performance

0 of 100

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 basic 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.

Miller Opportunity Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Miller Opportunity Trust 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, Miller Opportunity may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tiaa-cref Small/mid-cap and Miller Opportunity

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

The idea behind Tiaa Cref Smallmid Cap Equity and Miller Opportunity Trust 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.