Correlation Between Tiaa-cref Large-cap and American Mutual
Can any of the company-specific risk be diversified away by investing in both Tiaa-cref Large-cap and American Mutual 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 Large-cap and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tiaa Cref Large Cap Value and American Mutual Fund, you can compare the effects of market volatilities on Tiaa-cref Large-cap and American Mutual 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 Large-cap with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tiaa-cref Large-cap and American Mutual.
Diversification Opportunities for Tiaa-cref Large-cap and American Mutual
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Tiaa-cref and American is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Tiaa Cref Large Cap Value and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual and Tiaa-cref Large-cap 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 Large Cap Value are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Tiaa-cref Large-cap i.e., Tiaa-cref Large-cap and American Mutual go up and down completely randomly.
Pair Corralation between Tiaa-cref Large-cap and American Mutual
Assuming the 90 days horizon Tiaa Cref Large Cap Value is expected to generate 1.85 times more return on investment than American Mutual. However, Tiaa-cref Large-cap is 1.85 times more volatile than American Mutual Fund. It trades about 0.07 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.09 per unit of risk. If you would invest 1,824 in Tiaa Cref Large Cap Value on January 24, 2024 and sell it today you would earn a total of 275.00 from holding Tiaa Cref Large Cap Value or generate 15.08% 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 Large Cap Value vs. American Mutual Fund
Performance |
| Timeline |
| Tiaa-cref Large-cap |
| American Mutual |
Tiaa-cref Large-cap and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tiaa-cref Large-cap and American Mutual
The main advantage of trading using opposite Tiaa-cref Large-cap and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tiaa-cref Large-cap position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.The idea behind Tiaa Cref Large Cap Value and American Mutual 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.
| American Mutual vs. American Funds Fundamental | American Mutual vs. Amcap Fund Class | American Mutual vs. New Perspective Fund | American Mutual vs. American Balanced Fund |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |