Correlation Between Tiaa Cref and Dimensional 2055

Can any of the company-specific risk be diversified away by investing in both Tiaa Cref and Dimensional 2055 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 Dimensional 2055 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 Dimensional 2055 Target, you can compare the effects of market volatilities on Tiaa Cref and Dimensional 2055 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 Dimensional 2055. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa Cref and Dimensional 2055.

Diversification Opportunities for Tiaa Cref and Dimensional 2055

0.68

Correlation Coefficient

Tiaa Cref  Dimensional 2055

Poor diversification

The 3 months correlation between Tiaa and Dimensional is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Small Cap Equity and Dimensional 2055 Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional 2055 Target 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 Small Cap Equity are associated (or correlated) with Dimensional 2055. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional 2055 Target has no effect on the direction of Tiaa Cref i.e., Tiaa Cref and Dimensional 2055 go up and down completely randomly.

Pair Corralation between Tiaa Cref and Dimensional 2055

Assuming the 90 days horizon Tiaa Cref Small Cap Equity is expected to under-perform the Dimensional 2055. In addition to that, Tiaa Cref is 1.51 times more volatile than Dimensional 2055 Target. It trades about -0.17 of its total potential returns per unit of risk. Dimensional 2055 Target is currently generating about -0.2 per unit of volatility. If you would invest  2,039  in Dimensional 2055 Target on October 9, 2024 and sell it today you would lose (65.00) from holding Dimensional 2055 Target or give up 3.19% of portfolio value over 90 days.

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

Tiaa Cref Small Cap Equity  vs.  Dimensional 2055 Target

Tiaa Cref Small

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Dimensional 2055 Target

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional 2055 Target has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Dimensional 2055 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 Dimensional 2055

The main advantage of trading using opposite Tiaa Cref and Dimensional 2055 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiaa Cref position performs unexpectedly, Dimensional 2055 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 Dimensional 2055 will offset losses from the drop in Dimensional 2055's long position.

The idea behind Tiaa Cref Small Cap Equity and Dimensional 2055 Target 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.