Correlation Between Smallcap World and Tiaa Cref

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

Diversification Opportunities for Smallcap World and Tiaa Cref

1.0
  Correlation Coefficient

No risk reduction

The 3 months correlation between Smallcap and Tiaa is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap World Fund and Tiaa Cref Managed Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Managed and Smallcap World 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 Smallcap World Fund 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 Managed has no effect on the direction of Smallcap World i.e., Smallcap World and Tiaa Cref go up and down completely randomly.

Pair Corralation between Smallcap World and Tiaa Cref

Assuming the 90 days horizon Smallcap World Fund is expected to generate 1.83 times more return on investment than Tiaa Cref. However, Smallcap World is 1.83 times more volatile than Tiaa Cref Managed Allocation. It trades about 0.28 of its potential returns per unit of risk. Tiaa Cref Managed Allocation is currently generating about 0.3 per unit of risk. If you would invest  6,479  in Smallcap World Fund on April 30, 2025 and sell it today you would earn a total of  926.00  from holding Smallcap World Fund or generate 14.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Smallcap World Fund  vs.  Tiaa Cref Managed Allocation

 Performance 
       Timeline  
Smallcap World 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap World Fund are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Smallcap World showed solid returns over the last few months and may actually be approaching a breakup point.
Tiaa Cref Managed 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Managed Allocation are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Tiaa Cref may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Smallcap World and Tiaa Cref Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Smallcap World and Tiaa Cref

The main advantage of trading using opposite Smallcap World and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap World 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 Smallcap World Fund and Tiaa Cref Managed Allocation 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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