Correlation Between Vanguard Mid and Timothy Plan

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

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

Diversification Opportunities for Vanguard Mid and Timothy Plan

0.95

Correlation Coefficient

Vanguard Mid  Timothy Plan

Almost no diversification

The 3 months correlation between Vanguard and Timothy is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index and Timothy Plan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan and Vanguard Mid 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 Vanguard Mid Cap Index are associated (or correlated) with Timothy Plan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Plan has no effect on the direction of Vanguard Mid i.e., Vanguard Mid and Timothy Plan go up and down completely randomly.

Pair Corralation between Vanguard Mid and Timothy Plan

Allowing for the 90-day total investment horizon Vanguard Mid is expected to generate 1.3 times less return on investment than Timothy Plan. In addition to that, Vanguard Mid is 1.06 times more volatile than Timothy Plan . It trades about 0.19 of its total potential returns per unit of risk. Timothy Plan is currently generating about 0.26 per unit of volatility. If you would invest  2,580  in Timothy Plan on October 22, 2024 and sell it today you would earn a total of  89.70  from holding Timothy Plan or generate 3.48% return on investment over 90 days.

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

Vanguard Mid Cap Index  vs.  Timothy Plan

Vanguard Mid Cap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mid Cap Index are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard Mid is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Timothy Plan

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan are ranked lower than 3 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vanguard Mid and Timothy Plan

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

The idea behind Vanguard Mid Cap Index and Timothy Plan 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.