Correlation Between Cullen Small and Cullen High
Can any of the company-specific risk be diversified away by investing in both Cullen Small and Cullen High 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 Small and Cullen High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cullen Small Cap and Cullen High Dividend, you can compare the effects of market volatilities on Cullen Small and Cullen High 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 Small with a short position of Cullen High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullen Small and Cullen High.
Diversification Opportunities for Cullen Small and Cullen High
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cullen and Cullen is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cullen Small Cap and Cullen High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen High Dividend and Cullen 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 Cullen Small Cap are associated (or correlated) with Cullen High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen High Dividend has no effect on the direction of Cullen Small i.e., Cullen Small and Cullen High go up and down completely randomly.
Pair Corralation between Cullen Small and Cullen High
Assuming the 90 days horizon Cullen Small Cap is expected to generate 2.67 times more return on investment than Cullen High. However, Cullen Small is 2.67 times more volatile than Cullen High Dividend. It trades about 0.11 of its potential returns per unit of risk. Cullen High Dividend is currently generating about 0.03 per unit of risk. If you would invest 1,541 in Cullen Small Cap on August 26, 2024 and sell it today you would earn a total of 117.00 from holding Cullen Small Cap or generate 7.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cullen Small Cap vs. Cullen High Dividend
Performance |
| Timeline |
| Cullen Small Cap |
| Cullen High Dividend |
Cullen Small and Cullen High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cullen Small and Cullen High
The main advantage of trading using opposite Cullen Small and Cullen High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullen Small position performs unexpectedly, Cullen High 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 Cullen High will offset losses from the drop in Cullen High's long position.| Cullen Small vs. Cullen Small Cap | Cullen Small vs. Cullen Emerging Markets | Cullen Small vs. Cullen Emerging Markets | Cullen Small vs. Cullen Enhanced Equity |
| Cullen High vs. Cullen Small Cap | Cullen High vs. Cullen Small Cap | Cullen High vs. Cullen Small Cap | Cullen High vs. Cullen Value Fund |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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