Correlation Between GM and Tiaa Cref
Can any of the company-specific risk be diversified away by investing in both GM and Tiaa Cref 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 GM and Tiaa Cref into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Tiaa Cref Large Cap Growth, you can compare the effects of market volatilities on GM and Tiaa Cref 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 GM with a short position of Tiaa Cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Tiaa Cref.
Diversification Opportunities for GM and Tiaa Cref
Poor diversification
The 3 months correlation between GM and Tiaa is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Tiaa Cref Large Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Large and GM 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 General Motors are associated (or correlated) with Tiaa Cref. 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 Large has no effect on the direction of GM i.e., GM and Tiaa Cref go up and down completely randomly.
Pair Corralation between GM and Tiaa Cref
Allowing for the 90-day total investment horizon GM is expected to generate 1.24 times less return on investment than Tiaa Cref. In addition to that, GM is 1.68 times more volatile than Tiaa Cref Large Cap Growth. It trades about 0.03 of its total potential returns per unit of risk. Tiaa Cref Large Cap Growth is currently generating about 0.06 per unit of volatility. If you would invest 1,795 in Tiaa Cref Large Cap Growth on January 25, 2024 and sell it today you would earn a total of 754.00 from holding Tiaa Cref Large Cap Growth or generate 42.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Tiaa Cref Large Cap Growth
Performance |
| Timeline |
| General Motors |
| Tiaa Cref Large |
GM and Tiaa Cref Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Tiaa Cref
The main advantage of trading using opposite GM and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Tiaa Cref 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 will offset losses from the drop in Tiaa Cref's long position.The idea behind General Motors and Tiaa Cref Large Cap Growth 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.| Tiaa Cref vs. Dws Emerging Markets | Tiaa Cref vs. Hartford Emerging Markets | Tiaa Cref vs. Ep Emerging Markets | Tiaa Cref vs. Artisan Emerging Markets |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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