Correlation Between Municipal Bond and Tiaa-cref Lifecycle
Can any of the company-specific risk be diversified away by investing in both Municipal Bond and Tiaa-cref Lifecycle 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 Municipal Bond and Tiaa-cref Lifecycle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Municipal Bond Portfolio and Tiaa Cref Lifecycle Index, you can compare the effects of market volatilities on Municipal Bond and Tiaa-cref Lifecycle 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 Municipal Bond with a short position of Tiaa-cref Lifecycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Municipal Bond and Tiaa-cref Lifecycle.
Diversification Opportunities for Municipal Bond and Tiaa-cref Lifecycle
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Municipal and Tiaa-cref is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Municipal Bond Portfolio and Tiaa Cref Lifecycle Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifecycle and Municipal Bond 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 Municipal Bond Portfolio are associated (or correlated) with Tiaa-cref Lifecycle. 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 Lifecycle has no effect on the direction of Municipal Bond i.e., Municipal Bond and Tiaa-cref Lifecycle go up and down completely randomly.
Pair Corralation between Municipal Bond and Tiaa-cref Lifecycle
Assuming the 90 days horizon Municipal Bond is expected to generate 18.46 times less return on investment than Tiaa-cref Lifecycle. But when comparing it to its historical volatility, Municipal Bond Portfolio is 5.11 times less risky than Tiaa-cref Lifecycle. It trades about 0.09 of its potential returns per unit of risk. Tiaa Cref Lifecycle Index is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,387 in Tiaa Cref Lifecycle Index on April 25, 2025 and sell it today you would earn a total of 188.00 from holding Tiaa Cref Lifecycle Index or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Municipal Bond Portfolio vs. Tiaa Cref Lifecycle Index
Performance |
| Timeline |
| Municipal Bond Portfolio |
| Tiaa Cref Lifecycle |
Municipal Bond and Tiaa-cref Lifecycle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Municipal Bond and Tiaa-cref Lifecycle
The main advantage of trading using opposite Municipal Bond and Tiaa-cref Lifecycle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Municipal Bond position performs unexpectedly, Tiaa-cref Lifecycle 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 Lifecycle will offset losses from the drop in Tiaa-cref Lifecycle's long position.| Municipal Bond vs. Guidemark Large Cap | Municipal Bond vs. Americafirst Large Cap | Municipal Bond vs. M Large Cap | Municipal Bond vs. Tax Managed Large Cap |
| Tiaa-cref Lifecycle vs. Auer Growth Fund | Tiaa-cref Lifecycle vs. Nasdaq 100 Index Fund | Tiaa-cref Lifecycle vs. Balanced Fund Retail | Tiaa-cref Lifecycle vs. Victory High Yield |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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