Correlation Between Barings Global and Timothy Plan

Can any of the company-specific risk be diversified away by investing in both Barings Global 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 Barings Global and Timothy Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barings Global Floating and Timothy Plan High, you can compare the effects of market volatilities on Barings Global 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 Barings Global with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Global and Timothy Plan.

Diversification Opportunities for Barings Global and Timothy Plan

0.44

Correlation Coefficient

Barings Global  Timothy Plan

Very weak diversification

The 3 months correlation between Barings and Timothy is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Floating 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 Barings Global 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 Barings Global Floating 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 Barings Global i.e., Barings Global and Timothy Plan go up and down completely randomly.

Pair Corralation between Barings Global and Timothy Plan

Assuming the 90 days horizon Barings Global Floating is expected to generate 0.79 times more return on investment than Timothy Plan. However, Barings Global Floating is 1.26 times less risky than Timothy Plan. It trades about 0.23 of its potential returns per unit of risk. Timothy Plan High is currently generating about 0.14 per unit of risk. If you would invest  710.00  in Barings Global Floating on September 17, 2024 and sell it today you would earn a total of  169.00  from holding Barings Global Floating or generate 23.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Barings Global Floating  vs.  Timothy Plan High

Barings Global Floating

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Global Floating are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Barings Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Timothy Plan High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timothy Plan High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Timothy Plan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barings Global and Timothy Plan

The main advantage of trading using opposite Barings Global and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Global 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 Barings Global Floating and Timothy Plan High 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.