Correlation Between Tax-managed and Timothy Plan

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

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

Diversification Opportunities for Tax-managed and Timothy Plan

0.92

Correlation Coefficient

Tax-managed  Timothy Plan

Almost no diversification

The 3 months correlation between Tax-managed and Timothy is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Tax Managed Large Cap 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 Tax-managed 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 Tax Managed Large Cap 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 Tax-managed i.e., Tax-managed and Timothy Plan go up and down completely randomly.

Pair Corralation between Tax-managed and Timothy Plan

Assuming the 90 days horizon Tax Managed Large Cap is expected to generate 4.74 times more return on investment than Timothy Plan. However, Tax-managed is 4.74 times more volatile than Timothy Plan High. It trades about -0.01 of its potential returns per unit of risk. Timothy Plan High is currently generating about -0.25 per unit of risk. If you would invest  8,534  in Tax Managed Large Cap on July 17, 2025 and sell it today you would lose (19.00) from holding Tax Managed Large Cap or give up 0.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

Tax Managed Large Cap  vs.  Timothy Plan High

Tax Managed Large

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Managed Large Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Tax-managed 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

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan High are ranked lower than 12 (%) 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 Tax-managed and Timothy Plan

The main advantage of trading using opposite Tax-managed and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tax-managed 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 Tax Managed Large Cap 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.