Correlation Between Nasdaq and Timothy Plan

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

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

Diversification Opportunities for Nasdaq and Timothy Plan

0.37

Correlation Coefficient

Nasdaq  Timothy Plan

Weak diversification

The 3 months correlation between Nasdaq and Timothy is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Timothy Plan Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Large and Nasdaq 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 Nasdaq Inc 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 Large has no effect on the direction of Nasdaq i.e., Nasdaq and Timothy Plan go up and down completely randomly.

Pair Corralation between Nasdaq and Timothy Plan

Given the investment horizon of 90 days Nasdaq is expected to generate 1.25 times less return on investment than Timothy Plan. In addition to that, Nasdaq is 1.27 times more volatile than Timothy Plan Large. It trades about 0.04 of its total potential returns per unit of risk. Timothy Plan Large is currently generating about 0.07 per unit of volatility. If you would invest  931.00  in Timothy Plan Large on October 7, 2024 and sell it today you would earn a total of  364.00  from holding Timothy Plan Large or generate 39.1% return on investment over 90 days.

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

Nasdaq Inc  vs.  Timothy Plan Large

Nasdaq Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Timothy Plan Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timothy Plan Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Nasdaq and Timothy Plan

The main advantage of trading using opposite Nasdaq and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc and Timothy Plan Large 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..