Correlation Between Timothy Plan and Timothy Small-cap

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

By analyzing existing cross correlation between Timothy Plan Large and Timothy Small Cap Value, you can compare the effects of market volatilities on Timothy Plan and Timothy Small-cap 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 Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Plan and Timothy Small-cap.

Diversification Opportunities for Timothy Plan and Timothy Small-cap

0.11

Correlation Coefficient

Timothy Plan  Timothy Small-cap

Average diversification

The 3 months correlation between Timothy and Timothy is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan Large and Timothy Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Small 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 Large are associated (or correlated) with Timothy Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Small Cap has no effect on the direction of Timothy Plan i.e., Timothy Plan and Timothy Small-cap go up and down completely randomly.

Pair Corralation between Timothy Plan and Timothy Small-cap

Assuming the 90 days horizon Timothy Plan Large is expected to generate 0.93 times more return on investment than Timothy Small-cap. However, Timothy Plan Large is 1.08 times less risky than Timothy Small-cap. It trades about 0.05 of its potential returns per unit of risk. Timothy Small Cap Value is currently generating about -0.04 per unit of risk. If you would invest  1,419  in Timothy Plan Large on September 8, 2025 and sell it today you would earn a total of  46.00  from holding Timothy Plan Large or generate 3.24% return on investment over 90 days.

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

Timothy Plan Large  vs.  Timothy Small Cap Value

Timothy Plan Large

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan Large are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. 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.

Timothy Small Cap

Risk-Adjusted Performance

Weakest

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-cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Timothy Plan and Timothy Small-cap

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

The idea behind Timothy Plan Large and Timothy Small 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.