Correlation Between Timothy Plan and Timothy Large/mid-cap
Can any of the company-specific risk be diversified away by investing in both Timothy Plan and Timothy Large/mid-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 Plan and Timothy Large/mid-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timothy Plan Conservative and Timothy Largemid Cap Value, you can compare the effects of market volatilities on Timothy Plan and Timothy Large/mid-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 Plan with a short position of Timothy Large/mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Plan and Timothy Large/mid-cap.
Diversification Opportunities for Timothy Plan and Timothy Large/mid-cap
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Timothy and Timothy is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan Conservative and Timothy Largemid Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Large/mid-cap and Timothy Plan 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 Plan Conservative are associated (or correlated) with Timothy Large/mid-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 Large/mid-cap has no effect on the direction of Timothy Plan i.e., Timothy Plan and Timothy Large/mid-cap go up and down completely randomly.
Pair Corralation between Timothy Plan and Timothy Large/mid-cap
Assuming the 90 days horizon Timothy Plan is expected to generate 1.22 times less return on investment than Timothy Large/mid-cap. But when comparing it to its historical volatility, Timothy Plan Conservative is 2.33 times less risky than Timothy Large/mid-cap. It trades about 0.36 of its potential returns per unit of risk. Timothy Largemid Cap Value is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,537 in Timothy Largemid Cap Value on September 2, 2024 and sell it today you would earn a total of 79.00 from holding Timothy Largemid Cap Value or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timothy Plan Conservative vs. Timothy Largemid Cap Value
Performance |
| Timeline |
| Timothy Plan Conservative |
| Timothy Large/mid-cap |
Timothy Plan and Timothy Large/mid-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timothy Plan and Timothy Large/mid-cap
The main advantage of trading using opposite Timothy Plan and Timothy Large/mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Plan position performs unexpectedly, Timothy Large/mid-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 Large/mid-cap will offset losses from the drop in Timothy Large/mid-cap's long position.| Timothy Plan vs. Timothy Fixed Income | Timothy Plan vs. Timothy Fixed Income | Timothy Plan vs. Timothy Plan Growth | Timothy Plan vs. Timothy Largemip Cap Growth |
| Timothy Large/mid-cap vs. Timothy Small Cap Value | Timothy Large/mid-cap vs. Timothy Plan Large | Timothy Large/mid-cap vs. Timothy Aggressive Growth | Timothy Large/mid-cap 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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