Correlation Between Timothy Small-cap and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Timothy Small-cap and Dow Jones 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 Small-cap and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timothy Small Cap Value and Dow Jones Industrial, you can compare the effects of market volatilities on Timothy Small-cap and Dow Jones 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 Small-cap with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timothy Small-cap and Dow Jones.
Diversification Opportunities for Timothy Small-cap and Dow Jones
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Timothy and Dow is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Timothy Small Cap Value and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Timothy Small-cap 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 Small Cap Value are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Timothy Small-cap i.e., Timothy Small-cap and Dow Jones go up and down completely randomly.
Pair Corralation between Timothy Small-cap and Dow Jones
Assuming the 90 days horizon Timothy Small-cap is expected to generate 1.45 times less return on investment than Dow Jones. In addition to that, Timothy Small-cap is 1.54 times more volatile than Dow Jones Industrial. It trades about 0.03 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.06 per unit of volatility. If you would invest 3,506,562 in Dow Jones Industrial on April 25, 2025 and sell it today you would earn a total of 962,829 from holding Dow Jones Industrial or generate 27.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Timothy Small Cap Value vs. Dow Jones Industrial
Performance |
| Timeline |
Timothy Small-cap and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Timothy Small Cap Value
Pair trading matchups for Timothy Small-cap
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Timothy Small-cap and Dow Jones
The main advantage of trading using opposite Timothy Small-cap and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timothy Small-cap position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Timothy Small-cap vs. Timothy Plan International | Timothy Small-cap vs. Westwood Largecap Value | Timothy Small-cap vs. Advisors Capital Tactical | Timothy Small-cap vs. Value Fund Value |
| Dow Jones vs. Bright Scholar Education | Dow Jones vs. Gannett Co | Dow Jones vs. Stagwell | Dow Jones vs. Marchex |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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