Correlation Between Timothy Large/mid-cap and Timothy Small
Can any of the company-specific risk be diversified away by investing in both Timothy Large/mid-cap 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 Large/mid-cap 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 Largemid Cap Value and Timothy Small Cap Value, you can compare the effects of market volatilities on Timothy Large/mid-cap 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 Large/mid-cap with a short position of Timothy Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Large/mid-cap and Timothy Small.
Diversification Opportunities for Timothy Large/mid-cap and Timothy Small
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 Largemid Cap Value 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 Large/mid-cap 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 Largemid Cap Value 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 Large/mid-cap i.e., Timothy Large/mid-cap and Timothy Small go up and down completely randomly.
Pair Corralation between Timothy Large/mid-cap and Timothy Small
Assuming the 90 days horizon Timothy Large/mid-cap is expected to generate 1.18 times less return on investment than Timothy Small. But when comparing it to its historical volatility, Timothy Largemid Cap Value is 1.35 times less risky than Timothy Small. It trades about 0.21 of its potential returns per unit of risk. Timothy Small Cap Value is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,925 in Timothy Small Cap Value on October 21, 2024 and sell it today you would earn a total of 67.00 from holding Timothy Small Cap Value or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timothy Largemid Cap Value vs. Timothy Small Cap Value
Performance |
| Timeline |
| Timothy Large/mid-cap |
| Timothy Small Cap |
Timothy Large/mid-cap and Timothy Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timothy Large/mid-cap and Timothy Small
The main advantage of trading using opposite Timothy Large/mid-cap and Timothy Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Large/mid-cap 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.| 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 |
| Timothy Small vs. Timothy Plan International | Timothy Small vs. Westwood Largecap Value | Timothy Small vs. Advisors Capital Tactical | Timothy Small vs. Value Fund Value |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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