Correlation Between Lumia and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both Lumia 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 Lumia and Timothy Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Timothy Plan Large, you can compare the effects of market volatilities on Lumia 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 Lumia with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Timothy Plan.
Diversification Opportunities for Lumia and Timothy Plan
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lumia and Timothy is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Timothy Plan Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Large and Lumia 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 Lumia 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 Large has no effect on the direction of Lumia i.e., Lumia and Timothy Plan go up and down completely randomly.
Pair Corralation between Lumia and Timothy Plan
Assuming the 90 days trading horizon Lumia is expected to under-perform the Timothy Plan. In addition to that, Lumia is 4.45 times more volatile than Timothy Plan Large. It trades about -0.32 of its total potential returns per unit of risk. Timothy Plan Large is currently generating about 0.11 per unit of volatility. If you would invest 1,272 in Timothy Plan Large on November 2, 2024 and sell it today you would earn a total of 36.00 from holding Timothy Plan Large or generate 2.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Lumia vs. Timothy Plan Large
Performance |
| Timeline |
| Lumia |
| Timothy Plan Large |
Lumia and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Timothy Plan
The main advantage of trading using opposite Lumia and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia 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 Lumia and Timothy Plan Large 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 Largemid Cap Value | Timothy Plan vs. Timothy Small Cap Value | Timothy Plan vs. Timothy Aggressive Growth | Timothy Plan vs. Timothy Plan International |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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