Correlation Between Tiaa Cref and Putnman Retirement

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

Diversification Opportunities for Tiaa Cref and Putnman Retirement

0.59

Correlation Coefficient

Tiaa Cref  Putnman Retirement

Very weak diversification

The 3 months correlation between Tiaa and Putnman is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Small Cap Equity and Putnman Retirement Ready in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnman Retirement Ready 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 Putnman Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnman Retirement Ready has no effect on the direction of Tiaa Cref i.e., Tiaa Cref and Putnman Retirement go up and down completely randomly.

Pair Corralation between Tiaa Cref and Putnman Retirement

Assuming the 90 days horizon Tiaa Cref Small Cap Equity is expected to generate 1.71 times more return on investment than Putnman Retirement. However, Tiaa Cref is 1.71 times more volatile than Putnman Retirement Ready. It trades about -0.16 of its potential returns per unit of risk. Putnman Retirement Ready is currently generating about -0.31 per unit of risk. If you would invest  1,937  in Tiaa Cref Small Cap Equity on October 10, 2024 and sell it today you would lose (84.00) from holding Tiaa Cref Small Cap Equity or give up 4.34% of portfolio value over 90 days.

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

Tiaa Cref Small Cap Equity  vs.  Putnman Retirement Ready

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 fairly strong basic indicators, Tiaa Cref is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Putnman Retirement Ready

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnman Retirement Ready has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Putnman Retirement 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 Putnman Retirement

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

The idea behind Tiaa Cref Small Cap Equity and Putnman Retirement Ready 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.