Correlation Between Timothy Large/mid-cap and Timothy Plan

Can any of the company-specific risk be diversified away by investing in both Timothy Large/mid-cap 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 Large/mid-cap 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 Largemid Cap Value and Timothy Plan International, you can compare the effects of market volatilities on Timothy Large/mid-cap 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 Large/mid-cap with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Large/mid-cap and Timothy Plan.

Diversification Opportunities for Timothy Large/mid-cap and Timothy Plan

0.95

Correlation Coefficient

Timothy Large/mid-cap  Timothy Plan

Almost no diversification

The 3 months correlation between Timothy and Timothy is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Largemid Cap Value and Timothy Plan International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Interna and Timothy Large/mid-cap 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 Largemid Cap Value 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 Interna has no effect on the direction of Timothy Large/mid-cap i.e., Timothy Large/mid-cap and Timothy Plan go up and down completely randomly.

Pair Corralation between Timothy Large/mid-cap and Timothy Plan

Assuming the 90 days horizon Timothy Large/mid-cap is expected to generate 2.05 times less return on investment than Timothy Plan. But when comparing it to its historical volatility, Timothy Largemid Cap Value is 1.02 times less risky than Timothy Plan. It trades about 0.05 of its potential returns per unit of risk. Timothy Plan International is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,265  in Timothy Plan International on February 21, 2024 and sell it today you would earn a total of  38.00  from holding Timothy Plan International or generate 3.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.62%
Values	Daily Returns

Timothy Largemid Cap Value  vs.  Timothy Plan International

Timothy Large/mid-cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Largemid Cap Value are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Timothy Large/mid-cap may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Timothy Plan Interna

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan International are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Timothy Plan may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Timothy Large/mid-cap and Timothy Plan

The main advantage of trading using opposite Timothy Large/mid-cap and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Large/mid-cap 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.

The idea behind Timothy Largemid Cap Value and Timothy Plan International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.