Correlation Between Vanguard and Timothy Plan

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

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

Diversification Opportunities for Vanguard and Timothy Plan

0.89

Correlation Coefficient

Vanguard  Timothy Plan

Very poor diversification

The 3 months correlation between Vanguard and Timothy is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP Mid Cap and Timothy Plan LargeMid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan LargeMid and Vanguard 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 Vanguard 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 LargeMid has no effect on the direction of Vanguard i.e., Vanguard and Timothy Plan go up and down completely randomly.

Pair Corralation between Vanguard and Timothy Plan

Given the investment horizon of 90 days Vanguard is expected to generate 1.0 times less return on investment than Timothy Plan. But when comparing it to its historical volatility, Vanguard SP Mid Cap is 1.07 times less risky than Timothy Plan. It trades about 0.32 of its potential returns per unit of risk. Timothy Plan LargeMid is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  4,270  in Timothy Plan LargeMid on October 20, 2024 and sell it today you would earn a total of  198.00  from holding Timothy Plan LargeMid or generate 4.64% return on investment over 90 days.

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

Vanguard SP Mid Cap  vs.  Timothy Plan LargeMid

Vanguard SP Mid

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard SP Mid Cap are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Timothy Plan LargeMid

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan LargeMid are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential 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 Vanguard and Timothy Plan

The main advantage of trading using opposite Vanguard and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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 Vanguard SP Mid Cap and Timothy Plan LargeMid 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..