Correlation Between American Balanced and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both American Balanced and Timothy Plan 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 Balanced and Timothy Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced and Timothy Plan Growth, you can compare the effects of market volatilities on American Balanced and Timothy Plan 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 Balanced with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Timothy Plan.
Diversification Opportunities for American Balanced and Timothy Plan
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Timothy is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced and Timothy Plan Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Growth and American Balanced 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 Balanced are associated (or correlated) with Timothy Plan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Plan Growth has no effect on the direction of American Balanced i.e., American Balanced and Timothy Plan go up and down completely randomly.
Pair Corralation between American Balanced and Timothy Plan
Assuming the 90 days horizon American Balanced is expected to generate 1.11 times more return on investment than Timothy Plan. However, American Balanced is 1.11 times more volatile than Timothy Plan Growth. It trades about 0.1 of its potential returns per unit of risk. Timothy Plan Growth is currently generating about 0.01 per unit of risk. If you would invest 2,813 in American Balanced on August 27, 2024 and sell it today you would earn a total of 840.00 from holding American Balanced or generate 29.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Balanced vs. Timothy Plan Growth
Performance |
| Timeline |
| American Balanced |
| Timothy Plan Growth |
American Balanced and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Timothy Plan
The main advantage of trading using opposite American Balanced and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Timothy Plan 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 Timothy Plan will offset losses from the drop in Timothy Plan's long position.| American Balanced vs. Income Fund Of | American Balanced vs. Capital Income Builder | American Balanced vs. Capital World Growth | American Balanced vs. Growth Fund Of |
| Timothy Plan vs. Timothy Fixed Income | Timothy Plan vs. Timothy Fixed Income | Timothy Plan vs. Timothy Aggressive Growth | Timothy Plan vs. Timothy Israel Mon |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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