Correlation Between TIAA Real and GreenSky

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Can any of the company-specific risk be diversified away by investing in both TIAA Real and GreenSky 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 Real and GreenSky into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TIAA Real Estate and GreenSky, you can compare the effects of market volatilities on TIAA Real and GreenSky 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 Real with a short position of GreenSky. Check out your portfolio center. Please also check ongoing floating volatility patterns of TIAA Real and GreenSky.

Diversification Opportunities for TIAA Real and GreenSky

-0.79
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between QREARX and GreenSky is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding TIAA Real Estate Account and GreenSky Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenSky and TIAA 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 Real Estate are associated (or correlated) with GreenSky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenSky has no effect on the direction of TIAA Real i.e., TIAA Real and GreenSky go up and down completely randomly.

Pair Corralation between TIAA Real and GreenSky

Assuming the 90 days trading horizon TIAA Real is expected to generate 5.66 times less return on investment than GreenSky. But when comparing it to its historical volatility, TIAA Real Estate is 46.47 times less risky than GreenSky. It trades about 0.46 of its potential returns per unit of risk. GreenSky is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  500.00  in GreenSky on February 24, 2022 and sell it today you would earn a total of  520.00  from holding GreenSky or generate 104.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy87.9%
ValuesDaily Returns

TIAA Real Estate Account  vs.  GreenSky Inc

 Performance (%) 
      Timeline 
TIAA Real Estate 
QREARX Performance
0 of 100
Over the last 90 days TIAA Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, TIAA Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
GreenSky 
GreenSky Performance
0 of 100
Over the last 90 days GreenSky has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly uncertain forward-looking signals, GreenSky may actually be approaching a critical reversion point that can send shares even higher in June 2022.

TIAA Real and GreenSky Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with TIAA Real and GreenSky

The main advantage of trading using opposite TIAA Real and GreenSky positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TIAA Real position performs unexpectedly, GreenSky 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 GreenSky will offset losses from the drop in GreenSky's long position.
The idea behind TIAA Real Estate and GreenSky 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.

GreenSky

Pair trading matchups for GreenSky

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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