Correlation Between Timothy Plan and Timothy Aggressive
Can any of the company-specific risk be diversified away by investing in both Timothy Plan 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 Plan 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 Plan Small and Timothy Aggressive Growth, you can compare the effects of market volatilities on Timothy Plan 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 Plan with a short position of Timothy Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Plan and Timothy Aggressive.
Diversification Opportunities for Timothy Plan and Timothy Aggressive
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Timothy and Timothy is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan Small 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 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 Small 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 Plan i.e., Timothy Plan and Timothy Aggressive go up and down completely randomly.
Pair Corralation between Timothy Plan and Timothy Aggressive
Assuming the 90 days horizon Timothy Plan Small is expected to generate 1.6 times more return on investment than Timothy Aggressive. However, Timothy Plan is 1.6 times more volatile than Timothy Aggressive Growth. It trades about 0.21 of its potential returns per unit of risk. Timothy Aggressive Growth is currently generating about 0.27 per unit of risk. If you would invest 1,188 in Timothy Plan Small on August 31, 2024 and sell it today you would earn a total of 95.00 from holding Timothy Plan Small or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Timothy Plan Small vs. Timothy Aggressive Growth
Performance |
| Timeline |
| Timothy Plan Small |
| Timothy Aggressive Growth |
Timothy Plan and Timothy Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timothy Plan and Timothy Aggressive
The main advantage of trading using opposite Timothy Plan and Timothy Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Plan 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 Plan vs. Timothy Largemid Cap Value | Timothy Plan vs. Timothy Small Cap Value | Timothy Plan vs. Timothy Largemip Cap Growth | Timothy Plan vs. Timothy Aggressive Growth |
| Timothy Aggressive vs. T Rowe Price | Timothy Aggressive vs. T Rowe Price | Timothy Aggressive vs. T Rowe Price | Timothy Aggressive vs. T Rowe Price |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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