Correlation Between Timothy Small and Timothy Israel

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

By analyzing existing cross correlation between Timothy Small Cap Value and Timothy Israel Mon, you can compare the effects of market volatilities on Timothy Small and Timothy Israel 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 Small with a short position of Timothy Israel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Small and Timothy Israel.

Diversification Opportunities for Timothy Small and Timothy Israel

-0.35

Correlation Coefficient

Timothy Small  Timothy Israel

Very good diversification

The 3 months correlation between Timothy and Timothy is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Small Cap Value and Timothy Israel Mon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Israel Mon and Timothy Small 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 Small Cap Value are associated (or correlated) with Timothy Israel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Israel Mon has no effect on the direction of Timothy Small i.e., Timothy Small and Timothy Israel go up and down completely randomly.

Pair Corralation between Timothy Small and Timothy Israel

Assuming the 90 days horizon Timothy Small is expected to generate 1.87 times less return on investment than Timothy Israel. In addition to that, Timothy Small is 1.02 times more volatile than Timothy Israel Mon. It trades about 0.2 of its total potential returns per unit of risk. Timothy Israel Mon is currently generating about 0.39 per unit of volatility. If you would invest  2,452  in Timothy Israel Mon on October 20, 2024 and sell it today you would earn a total of  187.00  from holding Timothy Israel Mon or generate 7.63% return on investment over 90 days.

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

Timothy Small Cap Value  vs.  Timothy Israel Mon

Timothy Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timothy Small Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Timothy Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Timothy Israel Mon

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Israel Mon are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Timothy Israel showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Timothy Small and Timothy Israel

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

The idea behind Timothy Small Cap Value and Timothy Israel Mon 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.