Correlation Between IShares SP and Timothy Plan

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

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

Diversification Opportunities for IShares SP and Timothy Plan

0.38

Correlation Coefficient

IShares SP  Timothy Plan

Weak diversification

The 3 months correlation between IShares and Timothy is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP Mid Cap 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 IShares SP 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 iShares SP Mid Cap 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 IShares SP i.e., IShares SP and Timothy Plan go up and down completely randomly.

Pair Corralation between IShares SP and Timothy Plan

Considering the 90-day investment horizon iShares SP Mid Cap is expected to under-perform the Timothy Plan. In addition to that, IShares SP is 1.21 times more volatile than Timothy Plan High. It trades about -0.06 of its total potential returns per unit of risk. Timothy Plan High is currently generating about 0.06 per unit of volatility. If you would invest  3,614  in Timothy Plan High on December 29, 2024 and sell it today you would earn a total of  109.00  from holding Timothy Plan High or generate 3.02% return on investment over 90 days.

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

iShares SP Mid Cap  vs.  Timothy Plan High

iShares SP Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares SP Mid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady forward-looking indicators, IShares SP is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Timothy Plan High

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan High are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Timothy Plan is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares SP and Timothy Plan

The main advantage of trading using opposite IShares SP and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP 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 iShares SP Mid Cap 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.