Correlation Between Cabana Target and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both Cabana Target 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 Cabana Target and Timothy Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cabana Target Drawdown and Timothy Plan International, you can compare the effects of market volatilities on Cabana Target 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 Cabana Target with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cabana Target and Timothy Plan.
Diversification Opportunities for Cabana Target and Timothy Plan
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cabana and Timothy is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cabana Target Drawdown and Timothy Plan International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Interna and Cabana Target 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 Cabana Target Drawdown 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 Interna has no effect on the direction of Cabana Target i.e., Cabana Target and Timothy Plan go up and down completely randomly.
Pair Corralation between Cabana Target and Timothy Plan
Given the investment horizon of 90 days Cabana Target is expected to generate 1.08 times less return on investment than Timothy Plan. But when comparing it to its historical volatility, Cabana Target Drawdown is 2.48 times less risky than Timothy Plan. It trades about 0.11 of its potential returns per unit of risk. Timothy Plan International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,421 in Timothy Plan International on September 2, 2024 and sell it today you would earn a total of 325.00 from holding Timothy Plan International or generate 13.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cabana Target Drawdown vs. Timothy Plan International
Performance |
| Timeline |
| Cabana Target Drawdown |
| Timothy Plan Interna |
Cabana Target and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cabana Target and Timothy Plan
The main advantage of trading using opposite Cabana Target and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cabana Target 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 Cabana Target Drawdown and Timothy Plan International 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 LargeMid | Timothy Plan vs. Timothy Plan High | Timothy Plan vs. Timothy Plan Small | 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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