Correlation Between Tiaa-cref Real and Vanguard Reit

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

By analyzing existing cross correlation between Tiaa Cref Real Estate and Vanguard Reit Index, you can compare the effects of market volatilities on Tiaa-cref Real and Vanguard Reit 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 Real with a short position of Vanguard Reit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Real and Vanguard Reit.

Diversification Opportunities for Tiaa-cref Real and Vanguard Reit

0.87

Correlation Coefficient

Tiaa-cref Real  Vanguard Reit

Very poor diversification

The 3 months correlation between Tiaa-cref and Vanguard is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Real Estate and Vanguard Reit Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Reit Index and Tiaa-cref Real 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 Real Estate are associated (or correlated) with Vanguard Reit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Reit Index has no effect on the direction of Tiaa-cref Real i.e., Tiaa-cref Real and Vanguard Reit go up and down completely randomly.

Pair Corralation between Tiaa-cref Real and Vanguard Reit

Assuming the 90 days horizon Tiaa Cref Real Estate is expected to under-perform the Vanguard Reit. But the mutual fund apears to be less risky and, when comparing its historical volatility, Tiaa Cref Real Estate is 1.05 times less risky than Vanguard Reit. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Vanguard Reit Index is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,936  in Vanguard Reit Index on May 15, 2025 and sell it today you would earn a total of  3.00  from holding Vanguard Reit Index or generate 0.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Tiaa Cref Real Estate  vs.  Vanguard Reit Index

Tiaa Cref Real

Risk-Adjusted Performance

Weakest

Over the last 90 days Tiaa Cref Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Tiaa-cref Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Reit Index

Risk-Adjusted Performance

Weakest

Over the last 90 days Vanguard Reit Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Vanguard Reit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tiaa-cref Real and Vanguard Reit

The main advantage of trading using opposite Tiaa-cref Real and Vanguard Reit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiaa-cref Real position performs unexpectedly, Vanguard Reit 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 Vanguard Reit will offset losses from the drop in Vanguard Reit's long position.

The idea behind Tiaa Cref Real Estate and Vanguard Reit Index 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.