Correlation Between Inverse Government and Cullen Value
Can any of the company-specific risk be diversified away by investing in both Inverse Government 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 Inverse Government and Cullen Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Government Long and Cullen Value Fund, you can compare the effects of market volatilities on Inverse Government 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 Inverse Government with a short position of Cullen Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Government and Cullen Value.
Diversification Opportunities for Inverse Government and Cullen Value
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Inverse and Cullen is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Government Long and Cullen Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen Value and Inverse Government 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 Inverse Government Long 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 Inverse Government i.e., Inverse Government and Cullen Value go up and down completely randomly.
Pair Corralation between Inverse Government and Cullen Value
Assuming the 90 days horizon Inverse Government is expected to generate 1.57 times less return on investment than Cullen Value. But when comparing it to its historical volatility, Inverse Government Long is 1.11 times less risky than Cullen Value. It trades about 0.18 of its potential returns per unit of risk. Cullen Value Fund is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,340 in Cullen Value Fund on October 21, 2024 and sell it today you would earn a total of 46.00 from holding Cullen Value Fund or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Government Long vs. Cullen Value Fund
Performance |
| Timeline |
| Inverse Government Long |
| Cullen Value |
Inverse Government and Cullen Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Government and Cullen Value
The main advantage of trading using opposite Inverse Government and Cullen Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Government 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.| Inverse Government vs. Hennessy Technology Fund | Inverse Government vs. Towpath Technology | Inverse Government vs. Blackrock Science Technology | Inverse Government vs. Fidelity Advisor Technology |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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