Correlation Between Pace Smallmedium and Timothy Plan

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

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

Diversification Opportunities for Pace Smallmedium and Timothy Plan

0.6

Correlation Coefficient

Pace Smallmedium  Timothy Plan

Poor diversification

The 3 months correlation between Pace and Timothy is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Value 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 Pace Smallmedium 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 Pace Smallmedium Value 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 Pace Smallmedium i.e., Pace Smallmedium and Timothy Plan go up and down completely randomly.

Pair Corralation between Pace Smallmedium and Timothy Plan

Assuming the 90 days horizon Pace Smallmedium is expected to generate 9.8 times less return on investment than Timothy Plan. In addition to that, Pace Smallmedium is 2.51 times more volatile than Timothy Plan Defensive. It trades about 0.01 of its total potential returns per unit of risk. Timothy Plan Defensive is currently generating about 0.26 per unit of volatility. If you would invest  1,526  in Timothy Plan Defensive on July 15, 2025 and sell it today you would earn a total of  112.00  from holding Timothy Plan Defensive or generate 7.34% return on investment over 90 days.

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

Pace Smallmedium Value  vs.  Timothy Plan Defensive

Pace Smallmedium Value

Risk-Adjusted Performance

Weakest

Over the last 90 days Pace Smallmedium Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pace Smallmedium 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 Pace Smallmedium and Timothy Plan

The main advantage of trading using opposite Pace Smallmedium and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Smallmedium 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 Pace Smallmedium Value 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.