Correlation Between Vanguard Information and Tiaa-cref Small-cap

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

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

Diversification Opportunities for Vanguard Information and Tiaa-cref Small-cap

0.89

Correlation Coefficient

Vanguard Information  Tiaa-cref Small-cap

Very poor diversification

The 3 months correlation between VANGUARD and Tiaa-cref is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Information Technolog and Tiaa Cref Small Cap Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa-cref Small-cap and Vanguard Information 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 Vanguard Information Technology are associated (or correlated) with Tiaa-cref Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa-cref Small-cap has no effect on the direction of Vanguard Information i.e., Vanguard Information and Tiaa-cref Small-cap go up and down completely randomly.

Pair Corralation between Vanguard Information and Tiaa-cref Small-cap

Assuming the 90 days horizon Vanguard Information Technology is expected to generate 0.97 times more return on investment than Tiaa-cref Small-cap. However, Vanguard Information Technology is 1.03 times less risky than Tiaa-cref Small-cap. It trades about 0.19 of its potential returns per unit of risk. Tiaa Cref Small Cap Blend is currently generating about 0.17 per unit of risk. If you would invest  27,931  in Vanguard Information Technology on September 5, 2024 and sell it today you would earn a total of  4,405  from holding Vanguard Information Technology or generate 15.77% return on investment over 90 days.

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

Vanguard Information Technolog  vs.  Tiaa Cref Small Cap Blend

Vanguard Information

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Information Technology are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Information showed solid returns over the last few months and may actually be approaching a breakup point.

Tiaa-cref Small-cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Small Cap Blend are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Tiaa-cref Small-cap showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard Information and Tiaa-cref Small-cap

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

The idea behind Vanguard Information Technology and Tiaa Cref Small Cap Blend 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 Transaction History module to view history of all your transactions and understand their impact on performance.