Correlation Between Timothy Plan and Leader Short

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

By analyzing existing cross correlation between Timothy Plan Defensive and Leader Short Term Bond, you can compare the effects of market volatilities on Timothy Plan and Leader Short 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 Leader Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Plan and Leader Short.

Diversification Opportunities for Timothy Plan and Leader Short

0.85

Correlation Coefficient

Timothy Plan  Leader Short

Very poor diversification

The 3 months correlation between Timothy and Leader is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan Defensive and Leader Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Short Term 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 Defensive are associated (or correlated) with Leader Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Short Term has no effect on the direction of Timothy Plan i.e., Timothy Plan and Leader Short go up and down completely randomly.

Pair Corralation between Timothy Plan and Leader Short

Assuming the 90 days horizon Timothy Plan Defensive is expected to generate 1.83 times more return on investment than Leader Short. However, Timothy Plan is 1.83 times more volatile than Leader Short Term Bond. It trades about 0.3 of its potential returns per unit of risk. Leader Short Term Bond is currently generating about 0.19 per unit of risk. If you would invest  1,372  in Timothy Plan Defensive on December 21, 2024 and sell it today you would earn a total of  96.00  from holding Timothy Plan Defensive or generate 7.0% return on investment over 90 days.

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

Timothy Plan Defensive  vs.  Leader Short Term Bond

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 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Timothy Plan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Leader Short Term

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leader Short Term Bond are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Leader Short 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 Plan and Leader Short

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

The idea behind Timothy Plan Defensive and Leader Short Term Bond 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.