Correlation Between Proshares Russell and Timothy Plan

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

By analyzing existing cross correlation between Proshares Russell 2000 and Timothy Plan Market, you can compare the effects of market volatilities on Proshares Russell 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 Proshares Russell with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proshares Russell and Timothy Plan.

Diversification Opportunities for Proshares Russell and Timothy Plan

-0.36

Correlation Coefficient

Proshares Russell  Timothy Plan

Very good diversification

The 3 months correlation between Proshares and Timothy is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Proshares Russell 2000 and Timothy Plan Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Market and Proshares Russell 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 Proshares Russell 2000 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 Market has no effect on the direction of Proshares Russell i.e., Proshares Russell and Timothy Plan go up and down completely randomly.

Pair Corralation between Proshares Russell and Timothy Plan

Given the investment horizon of 90 days Proshares Russell 2000 is expected to generate 10.58 times more return on investment than Timothy Plan. However, Proshares Russell is 10.58 times more volatile than Timothy Plan Market. It trades about 0.18 of its potential returns per unit of risk. Timothy Plan Market is currently generating about 0.02 per unit of risk. If you would invest  3,913  in Proshares Russell 2000 on September 2, 2024 and sell it today you would earn a total of  1,405  from holding Proshares Russell 2000 or generate 35.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Proshares Russell 2000  vs.  Timothy Plan Market

Proshares Russell 2000

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Proshares Russell 2000 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Proshares Russell displayed solid returns over the last few months and may actually be approaching a breakup point.

Timothy Plan Market

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan Market are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Timothy Plan is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Proshares Russell and Timothy Plan

The main advantage of trading using opposite Proshares Russell and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proshares Russell 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 Proshares Russell 2000 and Timothy Plan Market 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.