Correlation Between Timothy Aggressive and Timothy Small

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Can any of the company-specific risk be diversified away by investing in both Timothy Aggressive and Timothy Small 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 Timothy Aggressive and Timothy Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timothy Aggressive Growth and Timothy Small Cap Value, you can compare the effects of market volatilities on Timothy Aggressive and Timothy Small 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 Timothy Aggressive with a short position of Timothy Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Aggressive and Timothy Small.

Diversification Opportunities for Timothy Aggressive and Timothy Small

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Timothy and Timothy is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Aggressive Growth and Timothy Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Small Cap and Timothy Aggressive 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 Timothy Aggressive Growth are associated (or correlated) with Timothy Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Small Cap has no effect on the direction of Timothy Aggressive i.e., Timothy Aggressive and Timothy Small go up and down completely randomly.

Pair Corralation between Timothy Aggressive and Timothy Small

Assuming the 90 days horizon Timothy Aggressive Growth is expected to generate 1.24 times more return on investment than Timothy Small. However, Timothy Aggressive is 1.24 times more volatile than Timothy Small Cap Value. It trades about 0.0 of its potential returns per unit of risk. Timothy Small Cap Value is currently generating about -0.11 per unit of risk. If you would invest  1,396  in Timothy Aggressive Growth on September 12, 2024 and sell it today you would lose (2.00) from holding Timothy Aggressive Growth or give up 0.14% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Timothy Aggressive Growth  vs.  Timothy Small Cap Value

 Performance 
       Timeline  
Timothy Aggressive Growth 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Aggressive Growth are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Timothy Aggressive may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Timothy Small Cap 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Small Cap Value are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Timothy Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Timothy Aggressive and Timothy Small Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Timothy Aggressive and Timothy Small

The main advantage of trading using opposite Timothy Aggressive and Timothy Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Aggressive position performs unexpectedly, Timothy Small 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 Small will offset losses from the drop in Timothy Small's long position.
The idea behind Timothy Aggressive Growth and Timothy Small Cap Value 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.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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