Correlation Between Timothy Plan and Emerging Markets

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

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

Diversification Opportunities for Timothy Plan and Emerging Markets

0.98

Correlation Coefficient

Timothy Plan  Emerging Markets

Almost no diversification

The 3 months correlation between Timothy and Emerging is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Plan Conservative and Emerging Markets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Por and Timothy Plan 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 Timothy Plan Conservative are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Por has no effect on the direction of Timothy Plan i.e., Timothy Plan and Emerging Markets go up and down completely randomly.

Pair Corralation between Timothy Plan and Emerging Markets

Assuming the 90 days horizon Timothy Plan is expected to generate 1.99 times less return on investment than Emerging Markets. But when comparing it to its historical volatility, Timothy Plan Conservative is 1.91 times less risky than Emerging Markets. It trades about 0.24 of its potential returns per unit of risk. Emerging Markets Portfolio is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  2,140  in Emerging Markets Portfolio on May 1, 2025 and sell it today you would earn a total of  265.00  from holding Emerging Markets Portfolio or generate 12.38% return on investment over 90 days.

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

Timothy Plan Conservative  vs.  Emerging Markets Portfolio

Timothy Plan Conservative

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan Conservative are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Timothy Plan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Emerging Markets Por

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Emerging Markets Portfolio are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Emerging Markets may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Timothy Plan and Emerging Markets

The main advantage of trading using opposite Timothy Plan and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Plan position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.

The idea behind Timothy Plan Conservative and Emerging Markets Portfolio 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.