Correlation Between Global Technology and Cullen Value
Can any of the company-specific risk be diversified away by investing in both Global Technology and Cullen Value 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 Global Technology and Cullen Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Technology Portfolio and Cullen Value Fund, you can compare the effects of market volatilities on Global Technology and Cullen Value 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 Global Technology with a short position of Cullen Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Technology and Cullen Value.
Diversification Opportunities for Global Technology and Cullen Value
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Cullen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Global Technology Portfolio and Cullen Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen Value and Global Technology 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 Global Technology Portfolio are associated (or correlated) with Cullen Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen Value has no effect on the direction of Global Technology i.e., Global Technology and Cullen Value go up and down completely randomly.
Pair Corralation between Global Technology and Cullen Value
Assuming the 90 days horizon Global Technology Portfolio is expected to generate 1.87 times more return on investment than Cullen Value. However, Global Technology is 1.87 times more volatile than Cullen Value Fund. It trades about 0.11 of its potential returns per unit of risk. Cullen Value Fund is currently generating about 0.08 per unit of risk. If you would invest 1,401 in Global Technology Portfolio on September 12, 2024 and sell it today you would earn a total of 781.00 from holding Global Technology Portfolio or generate 55.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Technology Portfolio vs. Cullen Value Fund
Performance |
| Timeline |
| Global Technology |
| Cullen Value |
Global Technology and Cullen Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Technology and Cullen Value
The main advantage of trading using opposite Global Technology and Cullen Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Technology position performs unexpectedly, Cullen Value 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 Value will offset losses from the drop in Cullen Value's long position.| Global Technology vs. Mid Cap Growth | Global Technology vs. Small Pany Growth | Global Technology vs. T Rowe Price | Global Technology vs. Tfa Alphagen Growth |
| Cullen Value vs. Inverse Government Long | Cullen Value vs. Lord Abbett Government | Cullen Value vs. Us Government Securities | Cullen Value vs. Elfun Government Money |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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