Correlation Between Cullen Value and Cullen High
Can any of the company-specific risk be diversified away by investing in both Cullen Value 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 Value 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 Value Fund and Cullen High Dividend, you can compare the effects of market volatilities on Cullen Value 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 Value with a short position of Cullen High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullen Value and Cullen High.
Diversification Opportunities for Cullen Value and Cullen High
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cullen and Cullen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cullen Value Fund 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 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 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 Value i.e., Cullen Value and Cullen High go up and down completely randomly.
Pair Corralation between Cullen Value and Cullen High
Assuming the 90 days horizon Cullen Value Fund is expected to generate 1.34 times more return on investment than Cullen High. However, Cullen Value is 1.34 times more volatile than Cullen High Dividend. It trades about 0.29 of its potential returns per unit of risk. Cullen High Dividend is currently generating about 0.17 per unit of risk. If you would invest 1,413 in Cullen Value Fund on September 1, 2024 and sell it today you would earn a total of 67.00 from holding Cullen Value Fund or generate 4.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cullen Value Fund vs. Cullen High Dividend
Performance |
| Timeline |
| Cullen Value |
| Cullen High Dividend |
Cullen Value and Cullen High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cullen Value and Cullen High
The main advantage of trading using opposite Cullen Value and Cullen High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullen Value 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 Value vs. Strategic Allocation Aggressive | Cullen Value vs. Aqr Large Cap | Cullen Value vs. Alternative Asset Allocation | Cullen Value vs. Principal Lifetime Hybrid |
| Cullen High vs. The Value Fund | Cullen High vs. Lazard Global Listed | Cullen High vs. Lazard International Strategic | Cullen High vs. Tcw Relative Value |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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