Correlation Between Tomorrows Scholar and Tiaa-cref Small/mid-cap

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

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

Diversification Opportunities for Tomorrows Scholar and Tiaa-cref Small/mid-cap

-0.21

Correlation Coefficient

Tomorrows Scholar  Tiaa-cref Small/mid-cap

Very good diversification

The 3 months correlation between Tomorrows and Tiaa-cref is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Tomorrows Scholar College and Tiaa Cref Smallmid Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa-cref Small/mid-cap and Tomorrows Scholar 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 Tomorrows Scholar College are associated (or correlated) with Tiaa-cref Small/mid-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/mid-cap has no effect on the direction of Tomorrows Scholar i.e., Tomorrows Scholar and Tiaa-cref Small/mid-cap go up and down completely randomly.

Pair Corralation between Tomorrows Scholar and Tiaa-cref Small/mid-cap

Assuming the 90 days horizon Tomorrows Scholar College is expected to generate 0.48 times more return on investment than Tiaa-cref Small/mid-cap. However, Tomorrows Scholar College is 2.1 times less risky than Tiaa-cref Small/mid-cap. It trades about -0.09 of its potential returns per unit of risk. Tiaa Cref Smallmid Cap Equity is currently generating about -0.31 per unit of risk. If you would invest  5,686  in Tomorrows Scholar College on October 6, 2024 and sell it today you would lose (150.00) from holding Tomorrows Scholar College or give up 2.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Tomorrows Scholar College  vs.  Tiaa Cref Smallmid Cap Equity

Tomorrows Scholar College

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tomorrows Scholar College are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Tomorrows Scholar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tiaa-cref Small/mid-cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tiaa Cref Smallmid 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.

Pair Trading with Tomorrows Scholar and Tiaa-cref Small/mid-cap

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

The idea behind Tomorrows Scholar College and Tiaa Cref Smallmid Cap Equity 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.