Correlation Between Timothy Largemip and Timothy Plan

Can any of the company-specific risk be diversified away by investing in both Timothy Largemip 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 Largemip 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 Largemip Cap Growth and Timothy Plan Growth, you can compare the effects of market volatilities on Timothy Largemip 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 Largemip with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Largemip and Timothy Plan.

Diversification Opportunities for Timothy Largemip and Timothy Plan

0.52

Correlation Coefficient

Timothy Largemip  Timothy Plan

Very weak diversification

The 3 months correlation between Timothy and Timothy is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Largemip Cap Growth and Timothy Plan Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Growth and Timothy Largemip 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 Largemip Cap Growth 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 Growth has no effect on the direction of Timothy Largemip i.e., Timothy Largemip and Timothy Plan go up and down completely randomly.

Pair Corralation between Timothy Largemip and Timothy Plan

Assuming the 90 days horizon Timothy Largemip Cap Growth is expected to under-perform the Timothy Plan. In addition to that, Timothy Largemip is 3.6 times more volatile than Timothy Plan Growth. It trades about -0.03 of its total potential returns per unit of risk. Timothy Plan Growth is currently generating about -0.05 per unit of volatility. If you would invest  1,096  in Timothy Plan Growth on September 14, 2024 and sell it today you would lose (14.00) from holding Timothy Plan Growth or give up 1.28% of portfolio value over 90 days.

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

Timothy Largemip Cap Growth  vs.  Timothy Plan Growth

Timothy Largemip Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Timothy Plan Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timothy Plan Growth 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 Timothy Largemip and Timothy Plan

The main advantage of trading using opposite Timothy Largemip and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Largemip 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 Largemip Cap Growth and Timothy Plan Growth 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.