Correlation Between Cullen Emerging and Nebraska Municipal
Can any of the company-specific risk be diversified away by investing in both Cullen Emerging and Nebraska Municipal 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 Cullen Emerging and Nebraska Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cullen Emerging Markets and Nebraska Municipal Fund, you can compare the effects of market volatilities on Cullen Emerging and Nebraska Municipal 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 Cullen Emerging with a short position of Nebraska Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullen Emerging and Nebraska Municipal.
Diversification Opportunities for Cullen Emerging and Nebraska Municipal
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cullen and Nebraska is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cullen Emerging Markets and Nebraska Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nebraska Municipal and Cullen Emerging 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 Cullen Emerging Markets are associated (or correlated) with Nebraska Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nebraska Municipal has no effect on the direction of Cullen Emerging i.e., Cullen Emerging and Nebraska Municipal go up and down completely randomly.
Pair Corralation between Cullen Emerging and Nebraska Municipal
Assuming the 90 days horizon Cullen Emerging Markets is expected to generate 3.2 times more return on investment than Nebraska Municipal. However, Cullen Emerging is 3.2 times more volatile than Nebraska Municipal Fund. It trades about 0.07 of its potential returns per unit of risk. Nebraska Municipal Fund is currently generating about 0.04 per unit of risk. If you would invest 946.00 in Cullen Emerging Markets on November 28, 2024 and sell it today you would earn a total of 283.00 from holding Cullen Emerging Markets or generate 29.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cullen Emerging Markets vs. Nebraska Municipal Fund
Performance |
| Timeline |
| Cullen Emerging Markets |
| Nebraska Municipal |
Cullen Emerging and Nebraska Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cullen Emerging and Nebraska Municipal
The main advantage of trading using opposite Cullen Emerging and Nebraska Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullen Emerging position performs unexpectedly, Nebraska Municipal 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 Nebraska Municipal will offset losses from the drop in Nebraska Municipal's long position.| Cullen Emerging vs. Dreyfusstandish Global Fixed | Cullen Emerging vs. Buffalo High Yield | Cullen Emerging vs. Massmutual Premier E | Cullen Emerging vs. The Hartford World |
| Nebraska Municipal vs. M Large Cap | Nebraska Municipal vs. Guidemark Large Cap | Nebraska Municipal vs. Blackrock Large Cap | Nebraska Municipal vs. Fisher Large Cap |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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