Correlation Between Timothy Plan and Kentucky Tax

Can any of the company-specific risk be diversified away by investing in both Timothy Plan and Kentucky Tax 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 Kentucky Tax 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 Kentucky Tax Free Short To Medium, you can compare the effects of market volatilities on Timothy Plan and Kentucky Tax 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 Kentucky Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Plan and Kentucky Tax.

Diversification Opportunities for Timothy Plan and Kentucky Tax

0.14

Correlation Coefficient

Timothy Plan  Kentucky Tax

Average diversification

The 3 months correlation between Timothy and Kentucky is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan Defensive and Kentucky Tax Free Short To Med in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky Tax Free 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 Kentucky Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentucky Tax Free has no effect on the direction of Timothy Plan i.e., Timothy Plan and Kentucky Tax go up and down completely randomly.

Pair Corralation between Timothy Plan and Kentucky Tax

Assuming the 90 days horizon Timothy Plan Defensive is expected to under-perform the Kentucky Tax. In addition to that, Timothy Plan is 8.91 times more volatile than Kentucky Tax Free Short To Medium. It trades about -0.13 of its total potential returns per unit of risk. Kentucky Tax Free Short To Medium is currently generating about 0.12 per unit of volatility. If you would invest  514.00  in Kentucky Tax Free Short To Medium on September 14, 2024 and sell it today you would earn a total of  1.00  from holding Kentucky Tax Free Short To Medium or generate 0.19% return on investment over 90 days.

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

Timothy Plan Defensive  vs.  Kentucky Tax Free Short To Med

Timothy Plan Defensive

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kentucky Tax Free

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kentucky Tax Free Short To Medium has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Kentucky Tax 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 Kentucky Tax

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

The idea behind Timothy Plan Defensive and Kentucky Tax Free Short To Medium 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.