Correlation Between Needham Small and Timothy Plan
Can any of the company-specific risk be diversified away by investing in both Needham Small 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 Needham Small and Timothy Plan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Needham Small Cap and Timothy Plan Defensive, you can compare the effects of market volatilities on Needham Small 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 Needham Small with a short position of Timothy Plan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Timothy Plan.
Diversification Opportunities for Needham Small and Timothy Plan
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Needham and Timothy is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Timothy Plan Defensive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan Defensive and Needham Small 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 Needham Small 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 Defensive has no effect on the direction of Needham Small i.e., Needham Small and Timothy Plan go up and down completely randomly.
Pair Corralation between Needham Small and Timothy Plan
Assuming the 90 days horizon Needham Small Cap is expected to generate 3.44 times more return on investment than Timothy Plan. However, Needham Small is 3.44 times more volatile than Timothy Plan Defensive. It trades about 0.33 of its potential returns per unit of risk. Timothy Plan Defensive is currently generating about 0.1 per unit of risk. If you would invest 1,326 in Needham Small Cap on April 21, 2025 and sell it today you would earn a total of 535.00 from holding Needham Small Cap or generate 40.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Small Cap vs. Timothy Plan Defensive
Performance |
| Timeline |
| Needham Small Cap |
| Timothy Plan Defensive |
Needham Small and Timothy Plan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Small and Timothy Plan
The main advantage of trading using opposite Needham Small and Timothy Plan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small 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.| Needham Small vs. Baron Opportunity Fund | Needham Small vs. Jacob Micro Cap | Needham Small vs. Needham Aggressive Growth | Needham Small vs. Needham Growth Fund |
| Timothy Plan vs. Adams Diversified Equity | Timothy Plan vs. Global Diversified Income | Timothy Plan vs. Pgim Conservative Retirement | Timothy Plan vs. American Funds Conservative |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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