Correlation Between American Funds and Timothy Strategic
Can any of the company-specific risk be diversified away by investing in both American Funds and Timothy Strategic 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 Funds and Timothy Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Timothy Strategic Growth, you can compare the effects of market volatilities on American Funds and Timothy Strategic 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 Funds with a short position of Timothy Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Timothy Strategic.
Diversification Opportunities for American Funds and Timothy Strategic
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Timothy is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Timothy Strategic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Strategic Growth and American Funds 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 Funds American are associated (or correlated) with Timothy Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Strategic Growth has no effect on the direction of American Funds i.e., American Funds and Timothy Strategic go up and down completely randomly.
Pair Corralation between American Funds and Timothy Strategic
Assuming the 90 days horizon American Funds American is expected to generate 0.93 times more return on investment than Timothy Strategic. However, American Funds American is 1.07 times less risky than Timothy Strategic. It trades about 0.1 of its potential returns per unit of risk. Timothy Strategic Growth is currently generating about 0.03 per unit of risk. If you would invest 2,825 in American Funds American on September 2, 2024 and sell it today you would earn a total of 870.00 from holding American Funds American or generate 30.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Timothy Strategic Growth
Performance |
| Timeline |
| American Funds American |
| Timothy Strategic Growth |
American Funds and Timothy Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Timothy Strategic
The main advantage of trading using opposite American Funds and Timothy Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Timothy Strategic 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 Strategic will offset losses from the drop in Timothy Strategic's long position.| American Funds vs. Fidelity Advisor Health | American Funds vs. Live Oak Health | American Funds vs. Baillie Gifford Health | American Funds vs. Allianzgi Health Sciences |
| Timothy Strategic vs. Timothy Fixed Income | Timothy Strategic vs. Timothy Fixed Income | Timothy Strategic vs. Timothy Plan Growth | Timothy Strategic vs. Timothy Plan Strategic |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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