Correlation Between Financial Industries and Timothy Plan

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

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

Diversification Opportunities for Financial Industries and Timothy Plan

0.64

Correlation Coefficient

Financial Industries  Timothy Plan

Poor diversification

The 3 months correlation between Financial and Timothy is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Timothy Plan High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan High and Financial Industries 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 Financial Industries Fund 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 High has no effect on the direction of Financial Industries i.e., Financial Industries and Timothy Plan go up and down completely randomly.

Pair Corralation between Financial Industries and Timothy Plan

Assuming the 90 days horizon Financial Industries is expected to generate 1.55 times less return on investment than Timothy Plan. In addition to that, Financial Industries is 6.46 times more volatile than Timothy Plan High. It trades about 0.03 of its total potential returns per unit of risk. Timothy Plan High is currently generating about 0.34 per unit of volatility. If you would invest  887.00  in Timothy Plan High on May 19, 2025 and sell it today you would earn a total of  26.00  from holding Timothy Plan High or generate 2.93% return on investment over 90 days.

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

Financial Industries Fund  vs.  Timothy Plan High

Financial Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Financial Industries Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Financial Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Timothy Plan High

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan High are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward 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 Financial Industries and Timothy Plan

The main advantage of trading using opposite Financial Industries and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries 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 Financial Industries Fund and Timothy Plan High 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.