Correlation Between Timothy Strategic and Timothy Aggressive
Can any of the company-specific risk be diversified away by investing in both Timothy Strategic and Timothy Aggressive 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 Aggressive 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 Aggressive Growth, you can compare the effects of market volatilities on Timothy Strategic and Timothy Aggressive 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 Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Strategic and Timothy Aggressive.
Diversification Opportunities for Timothy Strategic and Timothy Aggressive
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Timothy and Timothy is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Strategic Growth and Timothy Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Aggressive Growth 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 Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Aggressive Growth has no effect on the direction of Timothy Strategic i.e., Timothy Strategic and Timothy Aggressive go up and down completely randomly.
Pair Corralation between Timothy Strategic and Timothy Aggressive
Assuming the 90 days horizon Timothy Strategic is expected to generate 2.65 times less return on investment than Timothy Aggressive. But when comparing it to its historical volatility, Timothy Strategic Growth is 2.15 times less risky than Timothy Aggressive. It trades about 0.33 of its potential returns per unit of risk. Timothy Aggressive Growth is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 957.00 in Timothy Aggressive Growth on September 2, 2024 and sell it today you would earn a total of 83.00 from holding Timothy Aggressive Growth or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timothy Strategic Growth vs. Timothy Aggressive Growth
Performance |
| Timeline |
| Timothy Strategic Growth |
| Timothy Aggressive Growth |
Timothy Strategic and Timothy Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timothy Strategic and Timothy Aggressive
The main advantage of trading using opposite Timothy Strategic and Timothy Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Strategic position performs unexpectedly, Timothy Aggressive 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 Aggressive will offset losses from the drop in Timothy Aggressive's long position.| Timothy Strategic vs. Timothy Fixed Income | Timothy Strategic vs. Timothy Fixed Income | Timothy Strategic vs. Timothy Plan Growth | Timothy Strategic vs. Timothy Plan Growth |
| Timothy Aggressive vs. Timothy Fixed Income | Timothy Aggressive vs. Timothy Fixed Income | Timothy Aggressive vs. Timothy Plan Growth | Timothy Aggressive 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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