Correlation Between Cref Inflation and Timothy Large/mid-cap

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

By analyzing existing cross correlation between Cref Inflation Linked Bond and Timothy Largemid Cap Value, you can compare the effects of market volatilities on Cref Inflation and Timothy Large/mid-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 Cref Inflation with a short position of Timothy Large/mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation and Timothy Large/mid-cap.

Diversification Opportunities for Cref Inflation and Timothy Large/mid-cap

0.35

Correlation Coefficient

Cref Inflation  Timothy Large/mid-cap

Weak diversification

The 3 months correlation between Cref and Timothy is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Timothy Largemid Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Large/mid-cap and Cref Inflation 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 Cref Inflation Linked Bond are associated (or correlated) with Timothy Large/mid-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 Large/mid-cap has no effect on the direction of Cref Inflation i.e., Cref Inflation and Timothy Large/mid-cap go up and down completely randomly.

Pair Corralation between Cref Inflation and Timothy Large/mid-cap

Assuming the 90 days trading horizon Cref Inflation is expected to generate 4.36 times less return on investment than Timothy Large/mid-cap. But when comparing it to its historical volatility, Cref Inflation Linked Bond is 3.78 times less risky than Timothy Large/mid-cap. It trades about 0.14 of its potential returns per unit of risk. Timothy Largemid Cap Value is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,523  in Timothy Largemid Cap Value on May 2, 2025 and sell it today you would earn a total of  106.00  from holding Timothy Largemid Cap Value or generate 6.96% return on investment over 90 days.

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

Cref Inflation Linked Bond  vs.  Timothy Largemid Cap Value

Cref Inflation Linked

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cref Inflation Linked Bond are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Cref Inflation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Timothy Large/mid-cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Largemid Cap Value are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Timothy Large/mid-cap may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Cref Inflation and Timothy Large/mid-cap

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

The idea behind Cref Inflation Linked Bond and Timothy Largemid 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.