Correlation Between Timothy Largemid and Timothy Small-cap

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

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

Diversification Opportunities for Timothy Largemid and Timothy Small-cap

0.98

Correlation Coefficient

Timothy Largemid  Timothy Small-cap

Almost no diversification

The 3 months correlation between Timothy and Timothy is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Largemid Cap Value and Timothy Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Small Cap and Timothy Largemid 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 Largemid Cap Value are associated (or correlated) with Timothy Small-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 Small Cap has no effect on the direction of Timothy Largemid i.e., Timothy Largemid and Timothy Small-cap go up and down completely randomly.

Pair Corralation between Timothy Largemid and Timothy Small-cap

Assuming the 90 days horizon Timothy Largemid is expected to generate 1.8 times less return on investment than Timothy Small-cap. But when comparing it to its historical volatility, Timothy Largemid Cap Value is 1.68 times less risky than Timothy Small-cap. It trades about 0.08 of its potential returns per unit of risk. Timothy Small Cap Value is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,850  in Timothy Small Cap Value on May 20, 2025 and sell it today you would earn a total of  114.00  from holding Timothy Small Cap Value or generate 6.16% return on investment over 90 days.

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

Timothy Largemid Cap Value  vs.  Timothy Small Cap Value

Timothy Largemid Cap

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Largemid Cap Value are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Timothy Largemid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Timothy Small Cap

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Small Cap Value are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Timothy Small-cap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Timothy Largemid and Timothy Small-cap

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

The idea behind Timothy Largemid Cap Value and Timothy Small 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.