Correlation Between Needham Aggressive and Timothy Plan

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

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

Diversification Opportunities for Needham Aggressive and Timothy Plan

0.62

Correlation Coefficient

Needham Aggressive  Timothy Plan

Poor diversification

The 3 months correlation between Needham and Timothy is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth 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 Needham Aggressive 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 Needham Aggressive Growth 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 Needham Aggressive i.e., Needham Aggressive and Timothy Plan go up and down completely randomly.

Pair Corralation between Needham Aggressive and Timothy Plan

Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 2.68 times more return on investment than Timothy Plan. However, Needham Aggressive is 2.68 times more volatile than Timothy Plan Defensive. It trades about 0.2 of its potential returns per unit of risk. Timothy Plan Defensive is currently generating about 0.09 per unit of risk. If you would invest  4,886  in Needham Aggressive Growth on May 21, 2025 and sell it today you would earn a total of  758.00  from holding Needham Aggressive Growth or generate 15.51% return on investment over 90 days.

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

Needham Aggressive Growth  vs.  Timothy Plan Defensive

Needham Aggressive Growth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Needham Aggressive Growth are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Needham Aggressive showed solid returns over the last few months and may actually be approaching a breakup point.

Timothy Plan Defensive

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan Defensive are ranked lower than 7 (%) 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 Needham Aggressive and Timothy Plan

The main advantage of trading using opposite Needham Aggressive and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive 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 Needham Aggressive Growth 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.