Correlation Between NYSE Composite and Cullen Emerging
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Cullen Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Cullen Emerging Markets, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Cullen Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Cullen Emerging.
Diversification Opportunities for NYSE Composite and Cullen Emerging
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Cullen is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Cullen Emerging go up and down completely randomly.
Pair Corralation between NYSE Composite and Cullen Emerging
Assuming the 90 days trading horizon NYSE Composite is expected to under-perform the Cullen Emerging. But the index apears to be less risky and, when comparing its historical volatility, NYSE Composite is 1.26 times less risky than Cullen Emerging. The index trades about -0.02 of its potential returns per unit of risk. The Cullen Emerging Markets is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,230 in Cullen Emerging Markets on November 28, 2024 and sell it today you would earn a total of 23.00 from holding Cullen Emerging Markets or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Cullen Emerging Markets
Performance |
| Timeline |
NYSE Composite and Cullen Emerging Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Cullen Emerging Markets
Pair trading matchups for Cullen Emerging
Pair Trading with NYSE Composite and Cullen Emerging
The main advantage of trading using opposite NYSE Composite and Cullen Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Inter Parfums | NYSE Composite vs. Amkor Technology | NYSE Composite vs. Unilever PLC ADR | NYSE Composite vs. Estee Lauder Companies |
| Cullen Emerging vs. Johcm Emerging Markets | Cullen Emerging vs. Wasatch Emerging Markets | Cullen Emerging vs. Virtus Emerging Markets | Cullen Emerging vs. Artisan Developing World |
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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