Correlation Between IShares MSCI and Timothy Plan

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

Diversification Opportunities for IShares MSCI and Timothy Plan

0.83

Correlation Coefficient

IShares MSCI  Timothy Plan

Very poor diversification

The 3 months correlation between IShares and Timothy is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Intl 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 IShares MSCI 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 MSCI Intl 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 IShares MSCI i.e., IShares MSCI and Timothy Plan go up and down completely randomly.

Pair Corralation between IShares MSCI and Timothy Plan

Given the investment horizon of 90 days iShares MSCI Intl is expected to under-perform the Timothy Plan. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI Intl is 1.06 times less risky than Timothy Plan. The etf trades about -0.01 of its potential returns per unit of risk. The Timothy Plan International is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,779  in Timothy Plan International on December 5, 2024 and sell it today you would earn a total of  68.00  from holding Timothy Plan International or generate 2.45% return on investment over 90 days.

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

iShares MSCI Intl  vs.  Timothy Plan International

iShares MSCI Intl

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares MSCI Intl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, IShares MSCI is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Timothy Plan Interna

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Timothy Plan is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares MSCI and Timothy Plan

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

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..