Correlation Between Tiaa-cref Large-cap and Amcap Fund

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Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Large-cap and Amcap Fund 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 Large-cap and Amcap Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tiaa Cref Large Cap Growth and Amcap Fund Class, you can compare the effects of market volatilities on Tiaa-cref Large-cap and Amcap Fund 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 Large-cap with a short position of Amcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Large-cap and Amcap Fund.

Diversification Opportunities for Tiaa-cref Large-cap and Amcap Fund

0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between Tiaa-cref and Amcap is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding TIAA-CREF Large-Cap Growth and AMCAP FUND CLASS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcap Fund Class and Tiaa-cref Large-cap 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 Large Cap Growth are associated (or correlated) with Amcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcap Fund Class has no effect on the direction of Tiaa-cref Large-cap i.e., Tiaa-cref Large-cap and Amcap Fund go up and down completely randomly.

Pair Corralation between Tiaa-cref Large-cap and Amcap Fund

Assuming the 90 days horizon Tiaa Cref Large Cap Growth is expected to generate 1.12 times more return on investment than Amcap Fund. However, Tiaa-cref Large-cap is 1.12 times more volatile than Amcap Fund Class. It trades about 0.05 of its potential returns per unit of risk. Amcap Fund Class is currently generating about 0.04 per unit of risk. If you would invest  2,005  in Tiaa Cref Large Cap Growth on December 30, 2023 and sell it today you would earn a total of  634.00  from holding Tiaa Cref Large Cap Growth or generate 31.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

TIAA-CREF Large-Cap Growth  vs.  AMCAP FUND CLASS

 Performance 
       Timeline  
Tiaa-cref Large-cap 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Large Cap Growth are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tiaa-cref Large-cap showed solid returns over the last few months and may actually be approaching a breakup point.
Amcap Fund Class 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Amcap Fund Class are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Amcap Fund may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Tiaa-cref Large-cap and Amcap Fund Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tiaa-cref Large-cap and Amcap Fund

The main advantage of trading using opposite Tiaa-cref Large-cap and Amcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiaa-cref Large-cap position performs unexpectedly, Amcap Fund 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 Amcap Fund will offset losses from the drop in Amcap Fund's long position.
The idea behind Tiaa Cref Large Cap Growth and Amcap Fund Class 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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