Correlation Between Timothy Plan and SPDR BOFA
Can any of the company-specific risk be diversified away by investing in both Timothy Plan and SPDR BOFA 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 SPDR BOFA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timothy Plan Market and SPDR BOFA MERRILL, you can compare the effects of market volatilities on Timothy Plan and SPDR BOFA 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 SPDR BOFA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Plan and SPDR BOFA.
Diversification Opportunities for Timothy Plan and SPDR BOFA
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Timothy and SPDR is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan Market and SPDR BOFA MERRILL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR BOFA MERRILL 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 Market are associated (or correlated) with SPDR BOFA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR BOFA MERRILL has no effect on the direction of Timothy Plan i.e., Timothy Plan and SPDR BOFA go up and down completely randomly.
Pair Corralation between Timothy Plan and SPDR BOFA
Given the investment horizon of 90 days Timothy Plan is expected to generate 12.45 times less return on investment than SPDR BOFA. But when comparing it to its historical volatility, Timothy Plan Market is 7.58 times less risky than SPDR BOFA. It trades about 0.05 of its potential returns per unit of risk. SPDR BOFA MERRILL is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 885.00 in SPDR BOFA MERRILL on September 13, 2024 and sell it today you would earn a total of 1,017 from holding SPDR BOFA MERRILL or generate 114.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.95% |
| Values | Daily Returns |
Timothy Plan Market vs. SPDR BOFA MERRILL
Performance |
| Timeline |
| Timothy Plan Market |
| SPDR BOFA MERRILL |
Timothy Plan and SPDR BOFA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timothy Plan and SPDR BOFA
The main advantage of trading using opposite Timothy Plan and SPDR BOFA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Plan position performs unexpectedly, SPDR BOFA 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 SPDR BOFA will offset losses from the drop in SPDR BOFA's long position.| Timothy Plan vs. Timothy Plan Small | Timothy Plan vs. Timothy Plan LargeMid | Timothy Plan vs. Timothy Plan | Timothy Plan vs. Angel Oak Ultrashort |
| SPDR BOFA vs. iShares Factors Growth | SPDR BOFA vs. Absolute Core Strategy | SPDR BOFA vs. iShares ESG Advanced | SPDR BOFA vs. PIMCO RAFI Dynamic |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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