Correlation Between Timothy Plan and Timothy Plan

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

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

Diversification Opportunities for Timothy Plan and Timothy Plan

0.7

Correlation Coefficient

Timothy Plan  Timothy Plan

Poor diversification

The 3 months correlation between Timothy and Timothy is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan Conservative 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 Timothy Plan 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 Timothy Plan Conservative 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 Timothy Plan i.e., Timothy Plan and Timothy Plan go up and down completely randomly.

Pair Corralation between Timothy Plan and Timothy Plan

Assuming the 90 days horizon Timothy Plan Conservative is expected to generate 0.34 times more return on investment than Timothy Plan. However, Timothy Plan Conservative is 2.95 times less risky than Timothy Plan. It trades about -0.06 of its potential returns per unit of risk. Timothy Plan Large is currently generating about -0.17 per unit of risk. If you would invest  1,049  in Timothy Plan Conservative on December 4, 2024 and sell it today you would lose (17.00) from holding Timothy Plan Conservative or give up 1.62% of portfolio value over 90 days.

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

Timothy Plan Conservative  vs.  Timothy Plan Large

Timothy Plan Conservative

Risk-Adjusted Performance

Very Weak

Over the last 90 days Timothy Plan Conservative has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Timothy Plan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Timothy Plan Large

Risk-Adjusted Performance

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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Timothy Plan and Timothy Plan

The main advantage of trading using opposite Timothy Plan and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Plan 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 Timothy Plan Conservative 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.