Correlation Between Tiaa Cref and Vanguard Emerging

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

Diversification Opportunities for Tiaa Cref and Vanguard Emerging

0.24

Correlation Coefficient

Tiaa Cref  Vanguard Emerging

Modest diversification

The 3 months correlation between Tiaa and Vanguard is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Small Cap Equity and Vanguard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Emerging Markets 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 Vanguard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Emerging Markets has no effect on the direction of Tiaa Cref i.e., Tiaa Cref and Vanguard Emerging go up and down completely randomly.

Pair Corralation between Tiaa Cref and Vanguard Emerging

Assuming the 90 days horizon Tiaa Cref Small Cap Equity is expected to generate 1.87 times more return on investment than Vanguard Emerging. However, Tiaa Cref is 1.87 times more volatile than Vanguard Emerging Markets. It trades about -0.17 of its potential returns per unit of risk. Vanguard Emerging Markets is currently generating about -0.49 per unit of risk. If you would invest  1,937  in Tiaa Cref Small Cap Equity on October 9, 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tiaa Cref Small Cap Equity  vs.  Vanguard Emerging Markets

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.

Vanguard Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Tiaa Cref and Vanguard Emerging

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

The idea behind Tiaa Cref Small Cap Equity and Vanguard Emerging Markets 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.