Correlation Between Tiaa-cref Real and First Trust/confluence

Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Real and First Trust/confluence 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 First Trust/confluence 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 First Trustconfluence Small, you can compare the effects of market volatilities on Tiaa-cref Real and First Trust/confluence 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 First Trust/confluence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Real and First Trust/confluence.

Diversification Opportunities for Tiaa-cref Real and First Trust/confluence

0.25

Correlation Coefficient

Tiaa-cref Real  First Trust/confluence

Modest diversification

The 3 months correlation between Tiaa-cref and First is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Real Estate and First Trustconfluence Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust/confluence 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 First Trust/confluence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust/confluence has no effect on the direction of Tiaa-cref Real i.e., Tiaa-cref Real and First Trust/confluence go up and down completely randomly.

Pair Corralation between Tiaa-cref Real and First Trust/confluence

Assuming the 90 days horizon Tiaa Cref Real Estate is expected to under-perform the First Trust/confluence. But the mutual fund apears to be less risky and, when comparing its historical volatility, Tiaa Cref Real Estate is 1.49 times less risky than First Trust/confluence. The mutual fund trades about -0.03 of its potential returns per unit of risk. The First Trustconfluence Small is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,175  in First Trustconfluence Small on May 19, 2025 and sell it today you would lose (17.00) from holding First Trustconfluence Small or give up 0.78% of portfolio value over 90 days.

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

Tiaa Cref Real Estate  vs.  First Trustconfluence Small

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 basic 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.

First Trust/confluence

Risk-Adjusted Performance

Weakest

Over the last 90 days First Trustconfluence Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, First Trust/confluence 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 First Trust/confluence

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

The idea behind Tiaa Cref Real Estate and First Trustconfluence Small 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.