Correlation Between Timothy Strategic and Timothy Small

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

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

Diversification Opportunities for Timothy Strategic and Timothy Small

0.98

Correlation Coefficient

Timothy Strategic  Timothy Small

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 Strategic Growth 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 Strategic 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 Strategic Growth are associated (or correlated) with Timothy Small. 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 Strategic i.e., Timothy Strategic and Timothy Small go up and down completely randomly.

Pair Corralation between Timothy Strategic and Timothy Small

Assuming the 90 days horizon Timothy Strategic is expected to generate 1.94 times less return on investment than Timothy Small. But when comparing it to its historical volatility, Timothy Strategic Growth is 2.22 times less risky than Timothy Small. It trades about 0.22 of its potential returns per unit of risk. Timothy Small Cap Value is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,725  in Timothy Small Cap Value on May 1, 2025 and sell it today you would earn a total of  248.00  from holding Timothy Small Cap Value or generate 14.38% return on investment over 90 days.

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

Timothy Strategic Growth  vs.  Timothy Small Cap Value

Timothy Strategic Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Strategic Growth are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Timothy Strategic may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Timothy Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Timothy Strategic and Timothy Small

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

The idea behind Timothy Strategic Growth 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.