Correlation Between Timothy Small and Timothy Large/mid-cap

Can any of the company-specific risk be diversified away by investing in both Timothy Small 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 Timothy Small 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 Timothy Small Cap Value and Timothy Largemid Cap Value, you can compare the effects of market volatilities on Timothy Small 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 Timothy Small with a short position of Timothy Large/mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Small and Timothy Large/mid-cap.

Diversification Opportunities for Timothy Small and Timothy Large/mid-cap

0.99

Correlation Coefficient

Timothy Small  Timothy Large/mid-cap

No risk reduction

The 3 months correlation between Timothy and Timothy is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Small Cap Value 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 Timothy Small 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 Small Cap Value 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 Timothy Small i.e., Timothy Small and Timothy Large/mid-cap go up and down completely randomly.

Pair Corralation between Timothy Small and Timothy Large/mid-cap

Assuming the 90 days horizon Timothy Small Cap Value is expected to generate 1.59 times more return on investment than Timothy Large/mid-cap. However, Timothy Small is 1.59 times more volatile than Timothy Largemid Cap Value. It trades about 0.19 of its potential returns per unit of risk. Timothy Largemid Cap Value is currently generating about 0.18 per unit of risk. If you would invest  1,709  in Timothy Small Cap Value on May 3, 2025 and sell it today you would earn a total of  223.00  from holding Timothy Small Cap Value or generate 13.05% return on investment over 90 days.

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

Timothy Small Cap Value  vs.  Timothy Largemid Cap Value

Timothy Small Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Small Cap Value are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Timothy Small showed solid returns over the last few months and may actually be approaching a breakup point.

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 14 (%) 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 September 2025.

Pair Trading with Timothy Small and Timothy Large/mid-cap

The main advantage of trading using opposite Timothy Small and Timothy Large/mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Small 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 Timothy Small Cap Value 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.