Correlation Between Western Asset and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Timothy Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Timothy Plan Growth, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Timothy Plan.
Diversification Opportunities for Western Asset and Timothy Plan
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Timothy is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Timothy Plan Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Growth and Western Asset 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 Western Asset Diversified 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 Growth has no effect on the direction of Western Asset i.e., Western Asset and Timothy Plan go up and down completely randomly.
Pair Corralation between Western Asset and Timothy Plan
Assuming the 90 days horizon Western Asset is expected to generate 3.21 times less return on investment than Timothy Plan. But when comparing it to its historical volatility, Western Asset Diversified is 1.15 times less risky than Timothy Plan. It trades about 0.02 of its potential returns per unit of risk. Timothy Plan Growth is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,033 in Timothy Plan Growth on September 2, 2024 and sell it today you would earn a total of 93.00 from holding Timothy Plan Growth or generate 9.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Timothy Plan Growth
Performance |
| Timeline |
| Western Asset Diversified |
| Timothy Plan Growth |
Western Asset and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Timothy Plan
The main advantage of trading using opposite Western Asset and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Morningstar Unconstrained Allocation | Western Asset vs. Old Westbury Large | Western Asset vs. T Rowe Price | Western Asset vs. Enhanced Large Pany |
| Timothy Plan vs. Jp Morgan Smartretirement | Timothy Plan vs. Calvert Moderate Allocation | Timothy Plan vs. Dimensional Retirement Income | Timothy Plan vs. Blackrock Moderate Prepared |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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