Correlation Between Tiaa-cref Small-cap and International Stock

Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Small-cap and International Stock 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-cap and International Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tiaa Cref Small Cap Equity and International Stock Fund, you can compare the effects of market volatilities on Tiaa-cref Small-cap and International Stock 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-cap with a short position of International Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Small-cap and International Stock.

Diversification Opportunities for Tiaa-cref Small-cap and International Stock

0.61

Correlation Coefficient

Tiaa-cref Small-cap  International Stock

Poor diversification

The 3 months correlation between Tiaa-cref and International is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Small Cap Equity and International Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Stock and Tiaa-cref Small-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 Small Cap Equity are associated (or correlated) with International Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Stock has no effect on the direction of Tiaa-cref Small-cap i.e., Tiaa-cref Small-cap and International Stock go up and down completely randomly.

Pair Corralation between Tiaa-cref Small-cap and International Stock

Assuming the 90 days horizon Tiaa Cref Small Cap Equity is expected to generate 1.96 times more return on investment than International Stock. However, Tiaa-cref Small-cap is 1.96 times more volatile than International Stock Fund. It trades about -0.02 of its potential returns per unit of risk. International Stock Fund is currently generating about -0.09 per unit of risk. If you would invest  1,984  in Tiaa Cref Small Cap Equity on October 24, 2024 and sell it today you would lose (68.00) from holding Tiaa Cref Small Cap Equity or give up 3.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Tiaa Cref Small Cap Equity  vs.  International Stock Fund

Tiaa-cref Small-cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

International Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Stock Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, International Stock 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 Small-cap and International Stock

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

The idea behind Tiaa Cref Small Cap Equity and International Stock 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..