Correlation Between Timothy Plan and Timothy Largemid

Can any of the company-specific risk be diversified away by investing in both Timothy Plan and Timothy Largemid 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 Timothy Largemid 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 Timothy Largemid Cap Value, you can compare the effects of market volatilities on Timothy Plan and Timothy Largemid 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 Timothy Largemid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Plan and Timothy Largemid.

Diversification Opportunities for Timothy Plan and Timothy Largemid

0.59

Correlation Coefficient

Timothy Plan  Timothy Largemid

Very weak diversification

The 3 months correlation between Timothy and Timothy is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan Small and Timothy Largemid Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Largemid Cap 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 Timothy Largemid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Largemid Cap has no effect on the direction of Timothy Plan i.e., Timothy Plan and Timothy Largemid go up and down completely randomly.

Pair Corralation between Timothy Plan and Timothy Largemid

Assuming the 90 days horizon Timothy Plan Small is expected to under-perform the Timothy Largemid. In addition to that, Timothy Plan is 1.02 times more volatile than Timothy Largemid Cap Value. It trades about -0.19 of its total potential returns per unit of risk. Timothy Largemid Cap Value is currently generating about -0.18 per unit of volatility. If you would invest  2,538  in Timothy Largemid Cap Value on September 16, 2024 and sell it today you would lose (193.00) from holding Timothy Largemid Cap Value or give up 7.6% of portfolio value over 90 days.

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

Timothy Plan Small  vs.  Timothy Largemid Cap Value

Timothy Plan Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Timothy Largemid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timothy Largemid Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Timothy Plan and Timothy Largemid

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

The idea behind Timothy Plan Small and Timothy Largemid Cap Value 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.