Correlation Between American Beacon and Tiaa-cref Large-cap
Can any of the company-specific risk be diversified away by investing in both American Beacon 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 American Beacon 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 American Beacon Large and Tiaa Cref Large Cap Value, you can compare the effects of market volatilities on American Beacon 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 American Beacon with a short position of Tiaa-cref Large-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Tiaa-cref Large-cap.
Diversification Opportunities for American Beacon and Tiaa-cref Large-cap
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Tiaa-cref is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Large 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 American Beacon 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 American Beacon Large 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 American Beacon i.e., American Beacon and Tiaa-cref Large-cap go up and down completely randomly.
Pair Corralation between American Beacon and Tiaa-cref Large-cap
Assuming the 90 days horizon American Beacon Large is expected to under-perform the Tiaa-cref Large-cap. In addition to that, American Beacon is 1.07 times more volatile than Tiaa Cref Large Cap Value. It trades about -0.07 of its total potential returns per unit of risk. Tiaa Cref Large Cap Value is currently generating about -0.07 per unit of volatility. If you would invest 2,156 in Tiaa Cref Large Cap Value on January 25, 2024 and sell it today you would lose (23.00) from holding Tiaa Cref Large Cap Value or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Large vs. Tiaa Cref Large Cap Value
Performance |
| Timeline |
| American Beacon Large |
| Tiaa-cref Large-cap |
American Beacon and Tiaa-cref Large-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Tiaa-cref Large-cap
The main advantage of trading using opposite American Beacon and Tiaa-cref Large-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon 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.| American Beacon vs. American Funds 2055 | American Beacon vs. American High Income Municipal | American Beacon vs. American Beacon Large | American Beacon vs. American Century Etf |
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Check out your portfolio center.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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