Correlation Between Ford and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Timothy Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Timothy Plan High, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Timothy Plan.
Diversification Opportunities for Ford and Timothy Plan
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ford and Timothy is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Timothy Plan High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan High and Ford 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 Ford Motor 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 High has no effect on the direction of Ford i.e., Ford and Timothy Plan go up and down completely randomly.
Pair Corralation between Ford and Timothy Plan
Taking into account the 90-day investment horizon Ford is expected to generate 1.12 times less return on investment than Timothy Plan. In addition to that, Ford is 3.22 times more volatile than Timothy Plan High. It trades about 0.05 of its total potential returns per unit of risk. Timothy Plan High is currently generating about 0.19 per unit of volatility. If you would invest 3,769 in Timothy Plan High on August 24, 2024 and sell it today you would earn a total of 137.00 from holding Timothy Plan High or generate 3.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Timothy Plan High
Performance |
| Timeline |
| Ford Motor |
| Timothy Plan High |
Ford and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Timothy Plan
The main advantage of trading using opposite Ford and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and Timothy Plan High 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.| Timothy Plan vs. Timothy Plan LargeMid | Timothy Plan vs. Timothy Plan Small | 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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