Correlation Between Tiaa-cref Inflation-linked and Small Cap
Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Inflation-linked and 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 Tiaa-cref Inflation-linked and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tiaa Cref Inflation Linked Bond and Small Cap Core, you can compare the effects of market volatilities on Tiaa-cref Inflation-linked and 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 Tiaa-cref Inflation-linked with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Inflation-linked and Small Cap.
Diversification Opportunities for Tiaa-cref Inflation-linked and Small Cap
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tiaa-cref and Small is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Inflation Linked Bon and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core and Tiaa-cref Inflation-linked 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 Inflation Linked Bond are associated (or correlated) with 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 Small Cap Core has no effect on the direction of Tiaa-cref Inflation-linked i.e., Tiaa-cref Inflation-linked and Small Cap go up and down completely randomly.
Pair Corralation between Tiaa-cref Inflation-linked and Small Cap
Assuming the 90 days horizon Tiaa Cref Inflation Linked Bond is expected to generate 0.14 times more return on investment than Small Cap. However, Tiaa Cref Inflation Linked Bond is 6.93 times less risky than Small Cap. It trades about 0.1 of its potential returns per unit of risk. Small Cap Core is currently generating about 0.01 per unit of risk. If you would invest 988.00 in Tiaa Cref Inflation Linked Bond on April 14, 2025 and sell it today you would earn a total of 54.00 from holding Tiaa Cref Inflation Linked Bond or generate 5.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tiaa Cref Inflation Linked Bon vs. Small Cap Core
Performance |
| Timeline |
| Tiaa-cref Inflation-linked |
| Small Cap Core |
Tiaa-cref Inflation-linked and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tiaa-cref Inflation-linked and Small Cap
The main advantage of trading using opposite Tiaa-cref Inflation-linked and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiaa-cref Inflation-linked position performs unexpectedly, 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 Small Cap will offset losses from the drop in Small Cap's long position.The idea behind Tiaa Cref Inflation Linked Bond and Small Cap Core 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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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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