Correlation Between Timothy Small-cap and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both Timothy Small-cap 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 Small-cap 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 Small Cap Value and Timothy Plan High, you can compare the effects of market volatilities on Timothy Small-cap 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 Small-cap with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Small-cap and Timothy Plan.
Diversification Opportunities for Timothy Small-cap and Timothy Plan
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Timothy and Timothy is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Small Cap Value and Timothy Plan High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan High and Timothy Small-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 Small Cap Value 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 High has no effect on the direction of Timothy Small-cap i.e., Timothy Small-cap and Timothy Plan go up and down completely randomly.
Pair Corralation between Timothy Small-cap and Timothy Plan
Assuming the 90 days horizon Timothy Small Cap Value is expected to generate 13.36 times more return on investment than Timothy Plan. However, Timothy Small-cap is 13.36 times more volatile than Timothy Plan High. It trades about 0.26 of its potential returns per unit of risk. Timothy Plan High is currently generating about 0.37 per unit of risk. If you would invest 1,995 in Timothy Small Cap Value on September 2, 2024 and sell it today you would earn a total of 193.00 from holding Timothy Small Cap Value or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timothy Small Cap Value vs. Timothy Plan High
Performance |
| Timeline |
| Timothy Small Cap |
| Timothy Plan High |
Timothy Small-cap and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timothy Small-cap and Timothy Plan
The main advantage of trading using opposite Timothy Small-cap and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Small-cap 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 Small-cap vs. Timothy Largemid Cap Value | Timothy Small-cap vs. Timothy Plan Large | Timothy Small-cap vs. Timothy Aggressive Growth | Timothy Small-cap vs. Timothy Plan International |
| Timothy Plan vs. Timothy Fixed Income | Timothy Plan vs. Timothy Fixed Income | Timothy Plan vs. Timothy Plan Growth | Timothy Plan vs. Timothy Plan 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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