Correlation Between Global X and Timothy Plan

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

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

Diversification Opportunities for Global X and Timothy Plan

0.65

Correlation Coefficient

Global X  Timothy Plan

Poor diversification

The 3 months correlation between Global and Timothy is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Global X MSCI 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 Global X 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 Global X MSCI 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 Global X i.e., Global X and Timothy Plan go up and down completely randomly.

Pair Corralation between Global X and Timothy Plan

Given the investment horizon of 90 days Global X MSCI is expected to generate 1.09 times more return on investment than Timothy Plan. However, Global X is 1.09 times more volatile than Timothy Plan High. It trades about 0.07 of its potential returns per unit of risk. Timothy Plan High is currently generating about -0.08 per unit of risk. If you would invest  2,429  in Global X MSCI on December 5, 2024 and sell it today you would earn a total of  80.00  from holding Global X MSCI or generate 3.29% return on investment over 90 days.

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

Global X MSCI  vs.  Timothy Plan High

Global X MSCI

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X MSCI are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Global X is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Timothy Plan High

Risk-Adjusted Performance

Very Weak

Over the last 90 days Timothy Plan High has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Global X and Timothy Plan

The main advantage of trading using opposite Global X and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X MSCI 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.