Correlation Between Timothy Plan and IShares ESG

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

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

Diversification Opportunities for Timothy Plan and IShares ESG

-0.71

Correlation Coefficient

Timothy Plan  IShares ESG

Pay attention - limited upside

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

Pair Corralation between Timothy Plan and IShares ESG

Given the investment horizon of 90 days Timothy Plan Small is expected to generate 1.45 times more return on investment than IShares ESG. However, Timothy Plan is 1.45 times more volatile than iShares ESG Aware. It trades about 0.06 of its potential returns per unit of risk. iShares ESG Aware is currently generating about 0.04 per unit of risk. If you would invest  3,483  in Timothy Plan Small on September 16, 2024 and sell it today you would earn a total of  627.00  from holding Timothy Plan Small or generate 18.0% return on investment over 90 days.

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

Timothy Plan Small  vs.  iShares ESG Aware

Timothy Plan Small

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan Small are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Timothy Plan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares ESG Aware

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares ESG Aware has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, IShares ESG is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Timothy Plan and IShares ESG

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

The idea behind Timothy Plan Small and iShares ESG Aware 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.