Correlation Between Timothy Plan and Cabana Target

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

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

Diversification Opportunities for Timothy Plan and Cabana Target

0.79

Correlation Coefficient

Timothy Plan  Cabana Target

Poor diversification

The 3 months correlation between Timothy and Cabana is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan International and Cabana Target Drawdown in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabana Target Drawdown 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 International are associated (or correlated) with Cabana Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabana Target Drawdown has no effect on the direction of Timothy Plan i.e., Timothy Plan and Cabana Target go up and down completely randomly.

Pair Corralation between Timothy Plan and Cabana Target

Given the investment horizon of 90 days Timothy Plan International is expected to generate 1.32 times more return on investment than Cabana Target. However, Timothy Plan is 1.32 times more volatile than Cabana Target Drawdown. It trades about 0.04 of its potential returns per unit of risk. Cabana Target Drawdown is currently generating about 0.04 per unit of risk. If you would invest  2,631  in Timothy Plan International on December 5, 2024 and sell it today you would earn a total of  216.00  from holding Timothy Plan International or generate 8.21% return on investment over 90 days.

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

Timothy Plan International  vs.  Cabana Target Drawdown

Timothy Plan Interna

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Timothy Plan is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Cabana Target Drawdown

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cabana Target Drawdown has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Cabana Target is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Timothy Plan and Cabana Target

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

The idea behind Timothy Plan International and Cabana Target Drawdown 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.