Correlation Between Vanguard Total and Timothy Plan

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

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

Diversification Opportunities for Vanguard Total and Timothy Plan

-0.62

Correlation Coefficient

Vanguard Total  Timothy Plan

Excellent diversification

The 3 months correlation between Vanguard and Timothy is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Timothy Plan LargeMid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan LargeMid and Vanguard Total 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 Vanguard Total Bond are associated (or correlated) with Timothy Plan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Plan LargeMid has no effect on the direction of Vanguard Total i.e., Vanguard Total and Timothy Plan go up and down completely randomly.

Pair Corralation between Vanguard Total and Timothy Plan

Considering the 90-day investment horizon Vanguard Total Bond is expected to under-perform the Timothy Plan. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Total Bond is 2.41 times less risky than Timothy Plan. The etf trades about -0.02 of its potential returns per unit of risk. The Timothy Plan LargeMid is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,310  in Timothy Plan LargeMid on August 30, 2024 and sell it today you would earn a total of  313.00  from holding Timothy Plan LargeMid or generate 7.26% return on investment over 90 days.

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

Vanguard Total Bond  vs.  Timothy Plan LargeMid

Vanguard Total Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Vanguard Total is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Timothy Plan LargeMid

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan LargeMid are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Timothy Plan may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Vanguard Total and Timothy Plan

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

The idea behind Vanguard Total Bond and Timothy Plan LargeMid 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.