Correlation Between Timothy Large/mid-cap and Timothy Aggressive

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

By analyzing existing cross correlation between Timothy Largemid Cap Value and Timothy Aggressive Growth, you can compare the effects of market volatilities on Timothy Large/mid-cap and Timothy Aggressive 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 Large/mid-cap with a short position of Timothy Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Large/mid-cap and Timothy Aggressive.

Diversification Opportunities for Timothy Large/mid-cap and Timothy Aggressive

0.87

Correlation Coefficient

Timothy Large/mid-cap  Timothy Aggressive

Very poor diversification

The 3 months correlation between Timothy and Timothy is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Largemid Cap Value and Timothy Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Aggressive Growth and Timothy Large/mid-cap 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 Largemid Cap Value are associated (or correlated) with Timothy Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Aggressive Growth has no effect on the direction of Timothy Large/mid-cap i.e., Timothy Large/mid-cap and Timothy Aggressive go up and down completely randomly.

Pair Corralation between Timothy Large/mid-cap and Timothy Aggressive

Assuming the 90 days horizon Timothy Largemid Cap Value is expected to under-perform the Timothy Aggressive. But the mutual fund apears to be less risky and, when comparing its historical volatility, Timothy Largemid Cap Value is 1.06 times less risky than Timothy Aggressive. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Timothy Aggressive Growth is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,404  in Timothy Aggressive Growth on October 20, 2024 and sell it today you would lose (46.00) from holding Timothy Aggressive Growth or give up 3.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Timothy Largemid Cap Value  vs.  Timothy Aggressive Growth

Timothy Large/mid-cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timothy Largemid Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Timothy Aggressive Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timothy Aggressive Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Timothy Aggressive 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 Large/mid-cap and Timothy Aggressive

The main advantage of trading using opposite Timothy Large/mid-cap and Timothy Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Large/mid-cap position performs unexpectedly, Timothy Aggressive 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 Aggressive will offset losses from the drop in Timothy Aggressive's long position.

The idea behind Timothy Largemid Cap Value and Timothy Aggressive 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.

Check out your portfolio center.

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.