Correlation Between Cullen Value and Cullen Small
Can any of the company-specific risk be diversified away by investing in both Cullen Value and Cullen 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 Value and Cullen Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cullen Value Fund and Cullen Small Cap, you can compare the effects of market volatilities on Cullen Value and Cullen 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 Value with a short position of Cullen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullen Value and Cullen Small.
Diversification Opportunities for Cullen Value and Cullen Small
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cullen and Cullen is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cullen Value Fund and Cullen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen Small Cap and Cullen Value 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 Value Fund are associated (or correlated) with Cullen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen Small Cap has no effect on the direction of Cullen Value i.e., Cullen Value and Cullen Small go up and down completely randomly.
Pair Corralation between Cullen Value and Cullen Small
Assuming the 90 days horizon Cullen Value is expected to generate 1.81 times less return on investment than Cullen Small. But when comparing it to its historical volatility, Cullen Value Fund is 2.42 times less risky than Cullen Small. It trades about 0.21 of its potential returns per unit of risk. Cullen Small Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,303 in Cullen Small Cap on August 30, 2024 and sell it today you would earn a total of 84.00 from holding Cullen Small Cap or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cullen Value Fund vs. Cullen Small Cap
Performance |
| Timeline |
| Cullen Value |
| Cullen Small Cap |
Cullen Value and Cullen Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cullen Value and Cullen Small
The main advantage of trading using opposite Cullen Value and Cullen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullen Value position performs unexpectedly, Cullen 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 Cullen Small will offset losses from the drop in Cullen Small's long position.The idea behind Cullen Value Fund and Cullen Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Cullen Small vs. John Hancock Financial | Cullen Small vs. Icon Financial Fund | Cullen Small vs. Gabelli Global Financial | Cullen Small vs. Transamerica Financial Life |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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