Correlation Between Microsoft and Timothy Plan

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

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

Diversification Opportunities for Microsoft and Timothy Plan

0.29

Correlation Coefficient

Microsoft  Timothy Plan

Modest diversification

The 3 months correlation between Microsoft and Timothy is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft 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 Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Timothy Plan go up and down completely randomly.

Pair Corralation between Microsoft and Timothy Plan

Given the investment horizon of 90 days Microsoft is expected to under-perform the Timothy Plan. In addition to that, Microsoft is 1.8 times more volatile than Timothy Plan LargeMid. It trades about -0.14 of its total potential returns per unit of risk. Timothy Plan LargeMid is currently generating about -0.13 per unit of volatility. If you would invest  4,561  in Timothy Plan LargeMid on December 5, 2024 and sell it today you would lose (295.00) from holding Timothy Plan LargeMid or give up 6.47% of portfolio value over 90 days.

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

Microsoft  vs.  Timothy Plan LargeMid

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Timothy Plan LargeMid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Timothy Plan LargeMid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Microsoft and Timothy Plan

The main advantage of trading using opposite Microsoft and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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 Microsoft 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.