Correlation Between Vanguard Value and Tiaa-cref Large-cap

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

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

Diversification Opportunities for Vanguard Value and Tiaa-cref Large-cap

0.88

Correlation Coefficient

Vanguard Value  Tiaa-cref Large-cap

Very poor diversification

The 3 months correlation between Vanguard and Tiaa-cref is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and Tiaa Cref Large Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa-cref Large-cap and Vanguard Value 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 Vanguard Value Index are associated (or correlated) with Tiaa-cref Large-cap. 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 Large-cap has no effect on the direction of Vanguard Value i.e., Vanguard Value and Tiaa-cref Large-cap go up and down completely randomly.

Pair Corralation between Vanguard Value and Tiaa-cref Large-cap

Assuming the 90 days horizon Vanguard Value is expected to generate 1.13 times less return on investment than Tiaa-cref Large-cap. In addition to that, Vanguard Value is 1.02 times more volatile than Tiaa Cref Large Cap Value. It trades about 0.2 of its total potential returns per unit of risk. Tiaa Cref Large Cap Value is currently generating about 0.23 per unit of volatility. If you would invest  2,052  in Tiaa Cref Large Cap Value on May 1, 2025 and sell it today you would earn a total of  201.00  from holding Tiaa Cref Large Cap Value or generate 9.8% return on investment over 90 days.

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

Vanguard Value Index  vs.  Tiaa Cref Large Cap Value

Vanguard Value Index

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Value Index are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Value may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Tiaa-cref Large-cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Large Cap Value are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Tiaa-cref Large-cap may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Vanguard Value and Tiaa-cref Large-cap

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

The idea behind Vanguard Value Index and Tiaa Cref Large Cap Value 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.