Correlation Between HP and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both HP 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 HP and Timothy Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Timothy Plan , you can compare the effects of market volatilities on HP 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 HP with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Timothy Plan.
Diversification Opportunities for HP and Timothy Plan
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HP and Timothy is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Timothy Plan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan and HP 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 HP Inc 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 has no effect on the direction of HP i.e., HP and Timothy Plan go up and down completely randomly.
Pair Corralation between HP and Timothy Plan
Considering the 90-day investment horizon HP Inc is expected to generate 2.6 times more return on investment than Timothy Plan. However, HP is 2.6 times more volatile than Timothy Plan . It trades about 0.09 of its potential returns per unit of risk. Timothy Plan is currently generating about 0.1 per unit of risk. If you would invest 2,763 in HP Inc on August 27, 2024 and sell it today you would earn a total of 1,050 from holding HP Inc or generate 38.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HP Inc vs. Timothy Plan
Performance |
| Timeline |
| HP Inc |
| Timothy Plan |
HP and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Timothy Plan
The main advantage of trading using opposite HP and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP 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 HP Inc and Timothy Plan 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 | Timothy Plan vs. Timothy Plan LargeMid | Timothy Plan vs. Timothy Plan High | Timothy Plan vs. Timothy Plan Small |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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