Correlation Between First Trust and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Timothy Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Mid and Timothy Plan Small, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Timothy Plan.
Diversification Opportunities for First Trust and Timothy Plan
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Timothy is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Mid 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 First Trust 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 First Trust Mid 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 First Trust i.e., First Trust and Timothy Plan go up and down completely randomly.
Pair Corralation between First Trust and Timothy Plan
Considering the 90-day investment horizon First Trust is expected to generate 1.28 times less return on investment than Timothy Plan. But when comparing it to its historical volatility, First Trust Mid is 1.25 times less risky than Timothy Plan. It trades about 0.22 of its potential returns per unit of risk. Timothy Plan Small is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3,846 in Timothy Plan Small on August 24, 2024 and sell it today you would earn a total of 312.00 from holding Timothy Plan Small or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Mid vs. Timothy Plan Small
Performance |
| Timeline |
| First Trust Mid |
| Timothy Plan Small |
First Trust and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Timothy Plan
The main advantage of trading using opposite First Trust and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. Vanguard Mid Cap Index | First Trust vs. Vanguard Extended Market | First Trust vs. iShares Core SP | First Trust vs. iShares Russell Mid Cap |
| Timothy Plan vs. First Trust Mid | Timothy Plan vs. First Trust Large | Timothy Plan vs. First Trust Large | Timothy Plan vs. First Trust Large |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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