Correlation Between Dimensional Small and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both Dimensional Small 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 Dimensional Small and Timothy Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional Small Cap and Timothy Plan Small, you can compare the effects of market volatilities on Dimensional Small 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 Dimensional Small with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Small and Timothy Plan.
Diversification Opportunities for Dimensional Small and Timothy Plan
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Dimensional and Timothy is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Small Cap and Timothy Plan Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Small and Dimensional Small 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 Dimensional Small Cap 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 Small has no effect on the direction of Dimensional Small i.e., Dimensional Small and Timothy Plan go up and down completely randomly.
Pair Corralation between Dimensional Small and Timothy Plan
Given the investment horizon of 90 days Dimensional Small is expected to generate 1.04 times less return on investment than Timothy Plan. But when comparing it to its historical volatility, Dimensional Small Cap is 1.0 times less risky than Timothy Plan. It trades about 0.06 of its potential returns per unit of risk. Timothy Plan Small is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,057 in Timothy Plan Small on August 28, 2024 and sell it today you would earn a total of 1,238 from holding Timothy Plan Small or generate 40.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional Small Cap vs. Timothy Plan Small
Performance |
| Timeline |
| Dimensional Small Cap |
| Timothy Plan Small |
Dimensional Small and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Small and Timothy Plan
The main advantage of trading using opposite Dimensional Small and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Small 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.| Dimensional Small vs. Dimensional Targeted Value | Dimensional Small vs. Dimensional Equity ETF | Dimensional Small vs. Dimensional Core Equity | Dimensional Small vs. Dimensional International Core |
| Timothy Plan vs. Timothy Plan LargeMid | Timothy Plan vs. Timothy Plan High | Timothy Plan vs. Timothy Plan International | Timothy Plan vs. Timothy Plan |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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