Correlation Between NYSE Composite and Cullen Enhanced
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Cullen Enhanced 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 Enhanced 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 Enhanced Equity, you can compare the effects of market volatilities on NYSE Composite and Cullen Enhanced 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 Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Cullen Enhanced.
Diversification Opportunities for NYSE Composite and Cullen Enhanced
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Cullen is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Cullen Enhanced Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen Enhanced Equity 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 Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen Enhanced Equity has no effect on the direction of NYSE Composite i.e., NYSE Composite and Cullen Enhanced go up and down completely randomly.
Pair Corralation between NYSE Composite and Cullen Enhanced
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.13 times more return on investment than Cullen Enhanced. However, NYSE Composite is 1.13 times more volatile than Cullen Enhanced Equity. It trades about 0.26 of its potential returns per unit of risk. Cullen Enhanced Equity is currently generating about 0.26 per unit of risk. If you would invest 1,945,669 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 75,313 from holding NYSE Composite or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
NYSE Composite vs. Cullen Enhanced Equity
Performance |
| Timeline |
NYSE Composite and Cullen Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Cullen Enhanced Equity
Pair trading matchups for Cullen Enhanced
Pair Trading with NYSE Composite and Cullen Enhanced
The main advantage of trading using opposite NYSE Composite and Cullen Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Cullen Enhanced 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 Enhanced will offset losses from the drop in Cullen Enhanced's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| 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 |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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