Correlation Between Cullen Emerging and Cullen Value

Can any of the company-specific risk be diversified away by investing in both Cullen Emerging 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 Cullen Emerging and Cullen Value into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cullen Emerging Markets and Cullen Value Fund, you can compare the effects of market volatilities on Cullen Emerging 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 Cullen Emerging with a short position of Cullen Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullen Emerging and Cullen Value.

Diversification Opportunities for Cullen Emerging and Cullen Value

0.45

Correlation Coefficient

Cullen Emerging  Cullen Value

Very weak diversification

The 3 months correlation between Cullen and CULLEN is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cullen Emerging Markets and Cullen Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen Value and Cullen Emerging 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 Cullen Emerging Markets 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 Cullen Emerging i.e., Cullen Emerging and Cullen Value go up and down completely randomly.

Pair Corralation between Cullen Emerging and Cullen Value

Assuming the 90 days horizon Cullen Emerging Markets is expected to under-perform the Cullen Value. In addition to that, Cullen Emerging is 1.08 times more volatile than Cullen Value Fund. It trades about -0.01 of its total potential returns per unit of risk. Cullen Value Fund is currently generating about 0.09 per unit of volatility. If you would invest  1,416  in Cullen Value Fund on August 30, 2024 and sell it today you would earn a total of  59.00  from holding Cullen Value Fund or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Cullen Emerging Markets  vs.  Cullen Value Fund

Cullen Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cullen Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Cullen Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cullen Value

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cullen Value Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cullen Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cullen Emerging and Cullen Value

The main advantage of trading using opposite Cullen Emerging and Cullen Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullen Emerging 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.

The idea behind Cullen Emerging Markets and Cullen Value Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.