Correlation Between Timothy Plan and SPDR SP

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

Diversification Opportunities for Timothy Plan and SPDR SP

0.71

Correlation Coefficient

Timothy Plan  SPDR SP

Poor diversification

The 3 months correlation between Timothy and SPDR is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan High and SPDR SP Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Dividend 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Dividend has no effect on the direction of Timothy Plan i.e., Timothy Plan and SPDR SP go up and down completely randomly.

Pair Corralation between Timothy Plan and SPDR SP

Given the investment horizon of 90 days Timothy Plan is expected to generate 1.06 times less return on investment than SPDR SP. In addition to that, Timothy Plan is 1.19 times more volatile than SPDR SP Dividend. It trades about 0.06 of its total potential returns per unit of risk. SPDR SP Dividend is currently generating about 0.08 per unit of volatility. If you would invest  12,565  in SPDR SP Dividend on September 25, 2024 and sell it today you would earn a total of  766.00  from holding SPDR SP Dividend or generate 6.1% return on investment over 90 days.

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

Timothy Plan High  vs.  SPDR SP Dividend

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 investors with long positions. In spite of rather sound technical indicators, Timothy Plan is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

SPDR SP Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SP Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, SPDR SP 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 SPDR SP

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

The idea behind Timothy Plan High and SPDR SP Dividend 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.