Correlation Between Timothy Aggressive and Timothy Small-cap
Can any of the company-specific risk be diversified away by investing in both Timothy Aggressive and Timothy Small-cap 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-cap 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-cap 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-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Aggressive and Timothy Small-cap.
Diversification Opportunities for Timothy Aggressive and Timothy Small-cap
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Timothy and TIMOTHY is 0.87. 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-cap. 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-cap go up and down completely randomly.
Pair Corralation between Timothy Aggressive and Timothy Small-cap
Assuming the 90 days horizon Timothy Aggressive is expected to generate 1.12 times less return on investment than Timothy Small-cap. But when comparing it to its historical volatility, Timothy Aggressive Growth is 1.77 times less risky than Timothy Small-cap. It trades about 0.42 of its potential returns per unit of risk. Timothy Small Cap Value is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,036 in Timothy Small Cap Value on September 2, 2024 and sell it today you would earn a total of 198.00 from holding Timothy Small Cap Value or generate 9.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timothy Aggressive Growth vs. Timothy Small Cap Value
Performance |
| Timeline |
| Timothy Aggressive Growth |
| Timothy Small Cap |
Timothy Aggressive and Timothy Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timothy Aggressive and Timothy Small-cap
The main advantage of trading using opposite Timothy Aggressive and Timothy Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Aggressive position performs unexpectedly, Timothy Small-cap 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-cap will offset losses from the drop in Timothy Small-cap's long position.| Timothy Aggressive vs. Timothy Fixed Income | Timothy Aggressive vs. Timothy Fixed Income | Timothy Aggressive vs. Timothy Plan Growth | Timothy Aggressive vs. Timothy Plan Growth |
| Timothy Small-cap vs. Timothy Largemid Cap Value | Timothy Small-cap vs. Timothy Small Cap Value | Timothy Small-cap vs. Timothy Largemip Cap Growth | Timothy Small-cap vs. Timothy Aggressive Growth |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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