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 Dorsey and Timothy Plan LargeMid, 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
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Timothy is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Dorsey and Timothy Plan LargeMid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan LargeMid 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 Dorsey 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 LargeMid 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
Allowing for the 90-day total investment horizon First Trust Dorsey is expected to generate 1.51 times more return on investment than Timothy Plan. However, First Trust is 1.51 times more volatile than Timothy Plan LargeMid. It trades about 0.05 of its potential returns per unit of risk. Timothy Plan LargeMid is currently generating about 0.08 per unit of risk. If you would invest 4,715 in First Trust Dorsey on August 27, 2024 and sell it today you would earn a total of 1,401 from holding First Trust Dorsey or generate 29.71% 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 Dorsey vs. Timothy Plan LargeMid
Performance |
| Timeline |
| First Trust Dorsey |
| Timothy Plan LargeMid |
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. First Trust Dorsey | First Trust vs. Invesco DWA Momentum | First Trust vs. First Trust Capital | First Trust vs. First Trust Large |
| Timothy Plan vs. Timothy Plan High | 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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