Correlation Between Cullen High and Wasatch Small
Can any of the company-specific risk be diversified away by investing in both Cullen High and Wasatch Small 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 High and Wasatch Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cullen High Dividend and Wasatch Small Cap, you can compare the effects of market volatilities on Cullen High and Wasatch Small 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 High with a short position of Wasatch Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullen High and Wasatch Small.
Diversification Opportunities for Cullen High and Wasatch Small
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cullen and Wasatch is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cullen High Dividend and Wasatch Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Small Cap and Cullen High 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 High Dividend are associated (or correlated) with Wasatch Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Small Cap has no effect on the direction of Cullen High i.e., Cullen High and Wasatch Small go up and down completely randomly.
Pair Corralation between Cullen High and Wasatch Small
Assuming the 90 days horizon Cullen High is expected to generate 5.79 times less return on investment than Wasatch Small. But when comparing it to its historical volatility, Cullen High Dividend is 2.55 times less risky than Wasatch Small. It trades about 0.17 of its potential returns per unit of risk. Wasatch Small Cap is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 3,960 in Wasatch Small Cap on September 1, 2024 and sell it today you would earn a total of 498.00 from holding Wasatch Small Cap or generate 12.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cullen High Dividend vs. Wasatch Small Cap
Performance |
| Timeline |
| Cullen High Dividend |
| Wasatch Small Cap |
Cullen High and Wasatch Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cullen High and Wasatch Small
The main advantage of trading using opposite Cullen High and Wasatch Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullen High position performs unexpectedly, Wasatch Small 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 Wasatch Small will offset losses from the drop in Wasatch Small's long position.| Cullen High vs. The Value Fund | Cullen High vs. Lazard Global Listed | Cullen High vs. Lazard International Strategic | Cullen High vs. Tcw Relative Value |
| Wasatch Small vs. Wasatch E Growth | Wasatch Small vs. Wasatch Small Cap | Wasatch Small vs. Wasatch Micro Cap | Wasatch Small vs. Wasatch Ultra Growth |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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