Correlation Between Nasdaq-100(r) and Tiaa-cref Lifestyle

Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Tiaa-cref Lifestyle 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 Nasdaq-100(r) and Tiaa-cref Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Tiaa Cref Lifestyle Moderate, you can compare the effects of market volatilities on Nasdaq-100(r) and Tiaa-cref Lifestyle 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 Nasdaq-100(r) with a short position of Tiaa-cref Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Tiaa-cref Lifestyle.

Diversification Opportunities for Nasdaq-100(r) and Tiaa-cref Lifestyle

0.88

Correlation Coefficient

Nasdaq-100(r)  Tiaa-cref Lifestyle

Very poor diversification

The 3 months correlation between Nasdaq-100(r) and Tiaa-cref is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Tiaa Cref Lifestyle Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Lifestyle and Nasdaq-100(r) 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 Nasdaq 100 2x Strategy are associated (or correlated) with Tiaa-cref Lifestyle. 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 Lifestyle has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Tiaa-cref Lifestyle go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Tiaa-cref Lifestyle

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 2.87 times more return on investment than Tiaa-cref Lifestyle. However, Nasdaq-100(r) is 2.87 times more volatile than Tiaa Cref Lifestyle Moderate. It trades about 0.54 of its potential returns per unit of risk. Tiaa Cref Lifestyle Moderate is currently generating about 0.34 per unit of risk. If you would invest  42,626  in Nasdaq 100 2x Strategy on March 1, 2024 and sell it today you would earn a total of  7,010  from holding Nasdaq 100 2x Strategy or generate 16.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Nasdaq 100 2x Strategy  vs.  Tiaa Cref Lifestyle Moderate

Nasdaq 100 2x

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Nasdaq-100(r) is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tiaa Cref Lifestyle

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Lifestyle Moderate are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Tiaa-cref Lifestyle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq-100(r) and Tiaa-cref Lifestyle

The main advantage of trading using opposite Nasdaq-100(r) and Tiaa-cref Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Tiaa-cref Lifestyle 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 Lifestyle will offset losses from the drop in Tiaa-cref Lifestyle's long position.

The idea behind Nasdaq 100 2x Strategy and Tiaa Cref Lifestyle Moderate 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.