Correlation Between Tiaa-cref Lifecycle and Target 2040

Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Lifecycle and Target 2040 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 Lifecycle and Target 2040 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tiaa Cref Lifecycle Retirement and Target 2040 Fund, you can compare the effects of market volatilities on Tiaa-cref Lifecycle and Target 2040 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 Lifecycle with a short position of Target 2040. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Lifecycle and Target 2040.

Diversification Opportunities for Tiaa-cref Lifecycle and Target 2040

0.99

Correlation Coefficient

Tiaa-cref Lifecycle  Target 2040

No risk reduction

The 3 months correlation between Tiaa-cref and Target is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Lifecycle Retirement and Target 2040 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 2040 Fund and Tiaa-cref Lifecycle 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 Lifecycle Retirement are associated (or correlated) with Target 2040. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target 2040 Fund has no effect on the direction of Tiaa-cref Lifecycle i.e., Tiaa-cref Lifecycle and Target 2040 go up and down completely randomly.

Pair Corralation between Tiaa-cref Lifecycle and Target 2040

Assuming the 90 days horizon Tiaa-cref Lifecycle is expected to generate 1.33 times less return on investment than Target 2040. But when comparing it to its historical volatility, Tiaa Cref Lifecycle Retirement is 1.66 times less risky than Target 2040. It trades about 0.28 of its potential returns per unit of risk. Target 2040 Fund is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,675  in Target 2040 Fund on May 26, 2025 and sell it today you would earn a total of  106.00  from holding Target 2040 Fund or generate 6.33% return on investment over 90 days.

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

Tiaa Cref Lifecycle Retirement  vs.  Target 2040 Fund

Tiaa Cref Lifecycle

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Lifecycle Retirement are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Tiaa-cref Lifecycle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Target 2040 Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Target 2040 Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Target 2040 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 Lifecycle and Target 2040

The main advantage of trading using opposite Tiaa-cref Lifecycle and Target 2040 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiaa-cref Lifecycle position performs unexpectedly, Target 2040 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 Target 2040 will offset losses from the drop in Target 2040's long position.

The idea behind Tiaa Cref Lifecycle Retirement and Target 2040 Fund 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.