Correlation Between Kensington Dynamic and Tiaa Cref

Can any of the company-specific risk be diversified away by investing in both Kensington Dynamic 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 Kensington Dynamic and Tiaa Cref into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kensington Dynamic Growth and Tiaa Cref Inflation Linked Bond, you can compare the effects of market volatilities on Kensington Dynamic 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 Kensington Dynamic with a short position of Tiaa Cref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kensington Dynamic and Tiaa Cref.

Diversification Opportunities for Kensington Dynamic and Tiaa Cref

0.71

Correlation Coefficient

Kensington Dynamic  Tiaa Cref

Poor diversification

The 3 months correlation between Kensington and Tiaa is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kensington Dynamic Growth and Tiaa Cref Inflation Linked Bon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Inflation and Kensington Dynamic 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 Kensington Dynamic Growth 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 Inflation has no effect on the direction of Kensington Dynamic i.e., Kensington Dynamic and Tiaa Cref go up and down completely randomly.

Pair Corralation between Kensington Dynamic and Tiaa Cref

Assuming the 90 days horizon Kensington Dynamic Growth is expected to generate 4.0 times more return on investment than Tiaa Cref. However, Kensington Dynamic is 4.0 times more volatile than Tiaa Cref Inflation Linked Bond. It trades about 0.25 of its potential returns per unit of risk. Tiaa Cref Inflation Linked Bond is currently generating about 0.14 per unit of risk. If you would invest  1,162  in Kensington Dynamic Growth on May 6, 2025 and sell it today you would earn a total of  155.00  from holding Kensington Dynamic Growth or generate 13.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Kensington Dynamic Growth  vs.  Tiaa Cref Inflation Linked Bon

Kensington Dynamic Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kensington Dynamic Growth are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kensington Dynamic showed solid returns over the last few months and may actually be approaching a breakup point.

Tiaa Cref Inflation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Inflation Linked Bond are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Tiaa Cref is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kensington Dynamic and Tiaa Cref

The main advantage of trading using opposite Kensington Dynamic and Tiaa Cref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kensington Dynamic 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 Kensington Dynamic Growth and Tiaa Cref Inflation Linked Bond 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..