Correlation Between Growth Allocation and Timothy Plan

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

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

Diversification Opportunities for Growth Allocation and Timothy Plan

0.79

Correlation Coefficient

Growth Allocation  Timothy Plan

Poor diversification

The 3 months correlation between Growth and Timothy is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Growth Allocation Fund and Timothy Plan Defensive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Defensive and Growth Allocation 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 Growth Allocation 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 Defensive has no effect on the direction of Growth Allocation i.e., Growth Allocation and Timothy Plan go up and down completely randomly.

Pair Corralation between Growth Allocation and Timothy Plan

Assuming the 90 days horizon Growth Allocation is expected to generate 1.52 times less return on investment than Timothy Plan. But when comparing it to its historical volatility, Growth Allocation Fund is 1.07 times less risky than Timothy Plan. It trades about 0.19 of its potential returns per unit of risk. Timothy Plan Defensive is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,524  in Timothy Plan Defensive on July 30, 2025 and sell it today you would earn a total of  143.00  from holding Timothy Plan Defensive or generate 9.38% return on investment over 90 days.

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

Growth Allocation Fund  vs.  Timothy Plan Defensive

Growth Allocation

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Allocation Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Growth Allocation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Timothy Plan Defensive

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan Defensive are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Timothy Plan may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Growth Allocation and Timothy Plan

The main advantage of trading using opposite Growth Allocation and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Allocation 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 Growth Allocation Fund and Timothy Plan Defensive 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.