Correlation Between Timothy Plan and SPDR Portfolio

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

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

Diversification Opportunities for Timothy Plan and SPDR Portfolio

-0.44

Correlation Coefficient

Timothy Plan  SPDR Portfolio

Very good diversification

The 3 months correlation between Timothy and SPDR is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan and SPDR Portfolio Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Aggregate 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 are associated (or correlated) with SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Aggregate has no effect on the direction of Timothy Plan i.e., Timothy Plan and SPDR Portfolio go up and down completely randomly.

Pair Corralation between Timothy Plan and SPDR Portfolio

Given the investment horizon of 90 days Timothy Plan is expected to generate 2.01 times more return on investment than SPDR Portfolio. However, Timothy Plan is 2.01 times more volatile than SPDR Portfolio Aggregate. It trades about 0.09 of its potential returns per unit of risk. SPDR Portfolio Aggregate is currently generating about 0.03 per unit of risk. If you would invest  2,209  in Timothy Plan on September 17, 2024 and sell it today you would earn a total of  350.00  from holding Timothy Plan or generate 15.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Timothy Plan   vs.  SPDR Portfolio Aggregate

Timothy Plan

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Portfolio Aggregate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Portfolio Aggregate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SPDR Portfolio is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Timothy Plan and SPDR Portfolio

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

The idea behind Timothy Plan and SPDR Portfolio Aggregate 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.