Correlation Between IShares Russell and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both IShares Russell 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 IShares Russell and Timothy Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Russell 2000 and Timothy Plan Small, you can compare the effects of market volatilities on IShares Russell 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 IShares Russell with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and Timothy Plan.
Diversification Opportunities for IShares Russell and Timothy Plan
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Timothy is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 2000 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 IShares Russell 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 iShares Russell 2000 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 IShares Russell i.e., IShares Russell and Timothy Plan go up and down completely randomly.
Pair Corralation between IShares Russell and Timothy Plan
Considering the 90-day investment horizon iShares Russell 2000 is expected to generate 1.09 times more return on investment than Timothy Plan. However, IShares Russell is 1.09 times more volatile than Timothy Plan Small. It trades about 0.19 of its potential returns per unit of risk. Timothy Plan Small is currently generating about 0.19 per unit of risk. If you would invest 22,096 in iShares Russell 2000 on November 1, 2024 and sell it today you would earn a total of 873.00 from holding iShares Russell 2000 or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
iShares Russell 2000 vs. Timothy Plan Small
Performance |
| Timeline |
| iShares Russell 2000 |
| Timothy Plan Small |
IShares Russell and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and Timothy Plan
The main advantage of trading using opposite IShares Russell and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell 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.| IShares Russell vs. SPDR Dow Jones | IShares Russell vs. iShares MSCI Emerging | IShares Russell vs. Financial Select Sector | IShares Russell vs. SPDR SP 500 |
| Timothy Plan vs. Timothy Plan LargeMid | Timothy Plan vs. Timothy Plan High | 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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