Correlation Between Timothy Strategic and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both Timothy Strategic 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 Strategic 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 Strategic Growth and Timothy Plan High, you can compare the effects of market volatilities on Timothy Strategic 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 Strategic with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Strategic and Timothy Plan.
Diversification Opportunities for Timothy Strategic and Timothy Plan
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Timothy and Timothy is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Strategic Growth 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 Strategic 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 Strategic Growth 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 Strategic i.e., Timothy Strategic and Timothy Plan go up and down completely randomly.
Pair Corralation between Timothy Strategic and Timothy Plan
Assuming the 90 days horizon Timothy Strategic Growth is expected to generate 3.52 times more return on investment than Timothy Plan. However, Timothy Strategic is 3.52 times more volatile than Timothy Plan High. It trades about 0.21 of its potential returns per unit of risk. Timothy Plan High is currently generating about 0.23 per unit of risk. If you would invest 995.00 in Timothy Strategic Growth on August 31, 2024 and sell it today you would earn a total of 22.00 from holding Timothy Strategic Growth or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timothy Strategic Growth vs. Timothy Plan High
Performance |
| Timeline |
| Timothy Strategic Growth |
| Timothy Plan High |
Timothy Strategic and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timothy Strategic and Timothy Plan
The main advantage of trading using opposite Timothy Strategic and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Strategic 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 Strategic vs. American Funds American | Timothy Strategic vs. American Funds American | Timothy Strategic vs. American Balanced | Timothy Strategic vs. American Balanced Fund |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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