Correlation Between Timothy Plan and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both Timothy Plan 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 Timothy Plan and Timothy Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timothy Plan High and Timothy Plan LargeMid, you can compare the effects of market volatilities on Timothy Plan 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 Timothy Plan with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Plan and Timothy Plan.
Diversification Opportunities for Timothy Plan and Timothy Plan
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Timothy and Timothy is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan High and Timothy Plan LargeMid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan LargeMid 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 High 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 LargeMid has no effect on the direction of Timothy Plan i.e., Timothy Plan and Timothy Plan go up and down completely randomly.
Pair Corralation between Timothy Plan and Timothy Plan
Given the investment horizon of 90 days Timothy Plan is expected to generate 1.66 times less return on investment than Timothy Plan. But when comparing it to its historical volatility, Timothy Plan High is 1.02 times less risky than Timothy Plan. It trades about 0.12 of its potential returns per unit of risk. Timothy Plan LargeMid is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,333 in Timothy Plan LargeMid on November 9, 2024 and sell it today you would earn a total of 132.00 from holding Timothy Plan LargeMid or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timothy Plan High vs. Timothy Plan LargeMid
Performance |
| Timeline |
| Timothy Plan High |
| Timothy Plan LargeMid |
Timothy Plan and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timothy Plan and Timothy Plan
The main advantage of trading using opposite Timothy Plan and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Plan 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.| Timothy Plan vs. Timothy Plan LargeMid | Timothy Plan vs. Timothy Plan Small | Timothy Plan vs. Timothy Plan International | Timothy Plan vs. Timothy Plan |
| Timothy Plan vs. Timothy Plan High | Timothy Plan vs. Timothy Plan Small | Timothy Plan vs. Timothy Plan International | 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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