Correlation Between Timothy Plan and Vanguard Value

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

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

Diversification Opportunities for Timothy Plan and Vanguard Value

0.89

Correlation Coefficient

Timothy Plan  Vanguard Value

Very poor diversification

The 3 months correlation between Timothy and Vanguard is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan LargeMid and Vanguard Value Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Value Factor 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 LargeMid are associated (or correlated) with Vanguard Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Value Factor has no effect on the direction of Timothy Plan i.e., Timothy Plan and Vanguard Value go up and down completely randomly.

Pair Corralation between Timothy Plan and Vanguard Value

Given the investment horizon of 90 days Timothy Plan is expected to generate 1.07 times less return on investment than Vanguard Value. In addition to that, Timothy Plan is 1.09 times more volatile than Vanguard Value Factor. It trades about 0.31 of its total potential returns per unit of risk. Vanguard Value Factor is currently generating about 0.36 per unit of volatility. If you would invest  11,807  in Vanguard Value Factor on October 23, 2024 and sell it today you would earn a total of  588.00  from holding Vanguard Value Factor or generate 4.98% return on investment over 90 days.

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

Timothy Plan LargeMid  vs.  Vanguard Value Factor

Timothy Plan LargeMid

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan LargeMid are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Timothy Plan is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Vanguard Value Factor

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Value Factor are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vanguard Value 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 Vanguard Value

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

The idea behind Timothy Plan LargeMid and Vanguard Value Factor 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.