Correlation Between Transamerica Inflation and Timothy Plan

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

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

Diversification Opportunities for Transamerica Inflation and Timothy Plan

0.89

Correlation Coefficient

Transamerica Inflation  Timothy Plan

Very poor diversification

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

Pair Corralation between Transamerica Inflation and Timothy Plan

Assuming the 90 days horizon Transamerica Inflation is expected to generate 2.47 times less return on investment than Timothy Plan. But when comparing it to its historical volatility, Transamerica Inflation Opportunities is 1.64 times less risky than Timothy Plan. It trades about 0.16 of its potential returns per unit of risk. Timothy Plan Defensive is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,297  in Timothy Plan Defensive on December 24, 2024 and sell it today you would earn a total of  74.00  from holding Timothy Plan Defensive or generate 5.71% return on investment over 90 days.

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

Transamerica Inflation Opportu  vs.  Timothy Plan Defensive

Transamerica Inflation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Inflation Opportunities are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Transamerica Inflation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Timothy Plan Defensive

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan Defensive are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Transamerica Inflation and Timothy Plan

The main advantage of trading using opposite Transamerica Inflation and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Inflation 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 Transamerica Inflation Opportunities and Timothy Plan Defensive 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.