Correlation Between Cullen Enhanced and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Cullen Enhanced and Dow Jones 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 Enhanced and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cullen Enhanced Equity and Dow Jones Industrial, you can compare the effects of market volatilities on Cullen Enhanced and Dow Jones 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 Enhanced with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullen Enhanced and Dow Jones.
Diversification Opportunities for Cullen Enhanced and Dow Jones
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Cullen and Dow is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Cullen Enhanced Equity and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Cullen Enhanced 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 Enhanced Equity are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Cullen Enhanced i.e., Cullen Enhanced and Dow Jones go up and down completely randomly.
Pair Corralation between Cullen Enhanced and Dow Jones
Assuming the 90 days horizon Cullen Enhanced is expected to generate 2.86 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Cullen Enhanced Equity is 1.47 times less risky than Dow Jones. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,233,015 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 239,191 from holding Dow Jones Industrial or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cullen Enhanced Equity vs. Dow Jones Industrial
Performance |
| Timeline |
Cullen Enhanced and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Cullen Enhanced Equity
Pair trading matchups for Cullen Enhanced
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Cullen Enhanced and Dow Jones
The main advantage of trading using opposite Cullen Enhanced and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullen Enhanced position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Cullen Enhanced vs. Western Asset Diversified | Cullen Enhanced vs. Delaware Limited Term Diversified | Cullen Enhanced vs. Pgim Conservative Retirement | Cullen Enhanced vs. Jhancock Diversified Macro |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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