Correlation Between IShares Russell and Timothy Plan

Can any of the company-specific risk be diversified away by investing in both IShares 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 IShares 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 iShares Russell Mid Cap and Timothy Plan , you can compare the effects of market volatilities on IShares 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 IShares Russell with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and Timothy Plan.

Diversification Opportunities for IShares Russell and Timothy Plan

0.95

Correlation Coefficient

IShares Russell  Timothy Plan

Almost no diversification

The 3 months correlation between IShares and Timothy is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell Mid Cap and Timothy Plan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan and IShares 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 iShares Russell Mid Cap 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 has no effect on the direction of IShares Russell i.e., IShares Russell and Timothy Plan go up and down completely randomly.

Pair Corralation between IShares Russell and Timothy Plan

Considering the 90-day investment horizon iShares Russell Mid Cap is expected to generate 1.05 times more return on investment than Timothy Plan. However, IShares Russell is 1.05 times more volatile than Timothy Plan . It trades about 0.21 of its potential returns per unit of risk. Timothy Plan is currently generating about 0.18 per unit of risk. If you would invest  12,781  in iShares Russell Mid Cap on September 1, 2024 and sell it today you would earn a total of  1,234  from holding iShares Russell Mid Cap or generate 9.65% return on investment over 90 days.

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

iShares Russell Mid Cap  vs.  Timothy Plan

iShares Russell Mid

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Russell Mid Cap are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, IShares Russell may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Timothy Plan

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Timothy Plan may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with IShares Russell and Timothy Plan

The main advantage of trading using opposite IShares Russell and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 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 iShares Russell Mid Cap and Timothy Plan 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.