Correlation Between Cullen Enhanced and Cullen Emerging
Can any of the company-specific risk be diversified away by investing in both Cullen Enhanced and Cullen Emerging 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 Cullen Emerging 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 Cullen Emerging Markets, you can compare the effects of market volatilities on Cullen Enhanced and Cullen Emerging 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 Cullen Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullen Enhanced and Cullen Emerging.
Diversification Opportunities for Cullen Enhanced and Cullen Emerging
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cullen and Cullen is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Cullen Enhanced Equity and Cullen Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen Emerging Markets 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 Cullen Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen Emerging Markets has no effect on the direction of Cullen Enhanced i.e., Cullen Enhanced and Cullen Emerging go up and down completely randomly.
Pair Corralation between Cullen Enhanced and Cullen Emerging
Assuming the 90 days horizon Cullen Enhanced Equity is expected to generate 0.7 times more return on investment than Cullen Emerging. However, Cullen Enhanced Equity is 1.43 times less risky than Cullen Emerging. It trades about 0.11 of its potential returns per unit of risk. Cullen Emerging Markets is currently generating about -0.01 per unit of risk. If you would invest 1,058 in Cullen Enhanced Equity on August 26, 2024 and sell it today you would earn a total of 38.00 from holding Cullen Enhanced Equity or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cullen Enhanced Equity vs. Cullen Emerging Markets
Performance |
| Timeline |
| Cullen Enhanced Equity |
| Cullen Emerging Markets |
Cullen Enhanced and Cullen Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cullen Enhanced and Cullen Emerging
The main advantage of trading using opposite Cullen Enhanced and Cullen Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullen Enhanced position performs unexpectedly, Cullen Emerging 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 Emerging will offset losses from the drop in Cullen Emerging's long position.| Cullen Enhanced vs. Cullen Small Cap | Cullen Enhanced vs. Cullen Small Cap | Cullen Enhanced vs. Cullen Small Cap | Cullen Enhanced vs. Cullen Value Fund |
| Cullen Emerging vs. Cullen Small Cap | Cullen Emerging vs. Cullen Small Cap | Cullen Emerging vs. Cullen Small Cap | Cullen Emerging 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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