Correlation Between Templeton Constrained and Cullen Small
Can any of the company-specific risk be diversified away by investing in both Templeton Constrained 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 Templeton Constrained and Cullen Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Strained Bond and Cullen Small Cap, you can compare the effects of market volatilities on Templeton Constrained 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 Templeton Constrained with a short position of Cullen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Constrained and Cullen Small.
Diversification Opportunities for Templeton Constrained and Cullen Small
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Templeton and Cullen is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Strained Bond 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 Templeton Constrained 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 Templeton Strained Bond 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 Templeton Constrained i.e., Templeton Constrained and Cullen Small go up and down completely randomly.
Pair Corralation between Templeton Constrained and Cullen Small
Assuming the 90 days horizon Templeton Constrained is expected to generate 5.49 times less return on investment than Cullen Small. But when comparing it to its historical volatility, Templeton Strained Bond is 32.16 times less risky than Cullen Small. It trades about 0.91 of its potential returns per unit of risk. Cullen Small Cap is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,480 in Cullen Small Cap on August 30, 2024 and sell it today you would earn a total of 96.00 from holding Cullen Small Cap or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Templeton Strained Bond vs. Cullen Small Cap
Performance |
| Timeline |
| Templeton Strained Bond |
| Cullen Small Cap |
Templeton Constrained and Cullen Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Constrained and Cullen Small
The main advantage of trading using opposite Templeton Constrained and Cullen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Constrained 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.| Templeton Constrained vs. Ab Value Fund | Templeton Constrained vs. T Rowe Price | Templeton Constrained vs. Iaadx | Templeton Constrained vs. Rbc Microcap Value |
| Cullen Small vs. Cullen Small Cap | Cullen Small vs. Astoncrosswind Small Cap | Cullen Small vs. Cullen Small Cap | Cullen Small vs. Cullen High Dividend |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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