Correlation Between Timothy Small-cap and Active International

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

Diversification Opportunities for Timothy Small-cap and Active International

-0.17

Correlation Coefficient

Timothy Small-cap  Active International

Good diversification

The 3 months correlation between Timothy and Active is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Small Cap Value and Active International Allocatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Active International and Timothy Small-cap 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 Active International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Active International has no effect on the direction of Timothy Small-cap i.e., Timothy Small-cap and Active International go up and down completely randomly.

Pair Corralation between Timothy Small-cap and Active International

Assuming the 90 days horizon Timothy Small Cap Value is expected to under-perform the Active International. In addition to that, Timothy Small-cap is 1.7 times more volatile than Active International Allocation. It trades about -0.02 of its total potential returns per unit of risk. Active International Allocation is currently generating about 0.16 per unit of volatility. If you would invest  1,941  in Active International Allocation on August 7, 2025 and sell it today you would earn a total of  134.00  from holding Active International Allocation or generate 6.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Timothy Small Cap Value  vs.  Active International Allocatio

Timothy Small Cap

Risk-Adjusted Performance

Weakest

Over the last 90 days Timothy Small Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Timothy Small-cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Active International

Risk-Adjusted Performance

Good

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

Pair Trading with Timothy Small-cap and Active International

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

The idea behind Timothy Small Cap Value and Active International Allocation 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.