Correlation Between Timothy Plan and Prudential Core

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

By analyzing existing cross correlation between Timothy Plan High and Prudential Core Conservative, you can compare the effects of market volatilities on Timothy Plan and Prudential Core 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 Prudential Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Plan and Prudential Core.

Diversification Opportunities for Timothy Plan and Prudential Core

0.2

Correlation Coefficient

Timothy Plan  Prudential Core

Modest diversification

The 3 months correlation between Timothy and Prudential is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan High and Prudential Core Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Core Cons 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 High are associated (or correlated) with Prudential Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Core Cons has no effect on the direction of Timothy Plan i.e., Timothy Plan and Prudential Core go up and down completely randomly.

Pair Corralation between Timothy Plan and Prudential Core

Assuming the 90 days horizon Timothy Plan High is expected to generate 0.55 times more return on investment than Prudential Core. However, Timothy Plan High is 1.83 times less risky than Prudential Core. It trades about -0.02 of its potential returns per unit of risk. Prudential Core Conservative is currently generating about -0.16 per unit of risk. If you would invest  919.00  in Timothy Plan High on September 16, 2024 and sell it today you would lose (2.00) from holding Timothy Plan High or give up 0.22% of portfolio value over 90 days.

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

Timothy Plan High  vs.  Prudential Core Conservative

Timothy Plan High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timothy Plan High has generated negative risk-adjusted returns adding no value to fund investors. 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.

Prudential Core Cons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prudential Core Conservative has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Prudential Core 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 Prudential Core

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

The idea behind Timothy Plan High and Prudential Core Conservative 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.