Correlation Between William Blair and Timothy Plan

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

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

Diversification Opportunities for William Blair and Timothy Plan

0.29

Correlation Coefficient

William Blair  Timothy Plan

Modest diversification

The 3 months correlation between William and Timothy is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding William Blair Small and Timothy Plan Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Growth and William Blair 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 William Blair Small 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 Growth has no effect on the direction of William Blair i.e., William Blair and Timothy Plan go up and down completely randomly.

Pair Corralation between William Blair and Timothy Plan

Assuming the 90 days horizon William Blair Small is expected to under-perform the Timothy Plan. In addition to that, William Blair is 2.5 times more volatile than Timothy Plan Growth. It trades about -0.22 of its total potential returns per unit of risk. Timothy Plan Growth is currently generating about 0.2 per unit of volatility. If you would invest  1,072  in Timothy Plan Growth on December 5, 2024 and sell it today you would earn a total of  17.00  from holding Timothy Plan Growth or generate 1.59% return on investment over 90 days.

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

William Blair Small  vs.  Timothy Plan Growth

William Blair Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days William Blair Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Timothy Plan Growth

Risk-Adjusted Performance

Very Weak

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

Pair Trading with William Blair and Timothy Plan

The main advantage of trading using opposite William Blair and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Blair 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 William Blair Small and Timothy Plan Growth 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.