Correlation Between Abr Enhanced and Cullen Small

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

By analyzing existing cross correlation between Abr Enhanced Short and Cullen Small Cap, you can compare the effects of market volatilities on Abr Enhanced and Cullen Small 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 Abr Enhanced with a short position of Cullen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abr Enhanced and Cullen Small.

Diversification Opportunities for Abr Enhanced and Cullen Small

0.23

Correlation Coefficient

Abr Enhanced  Cullen Small

Modest diversification

The 3 months correlation between Abr and Cullen is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Abr Enhanced Short and Cullen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen Small Cap and Abr Enhanced 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 Abr Enhanced Short are associated (or correlated) with Cullen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen Small Cap has no effect on the direction of Abr Enhanced i.e., Abr Enhanced and Cullen Small go up and down completely randomly.

Pair Corralation between Abr Enhanced and Cullen Small

Assuming the 90 days horizon Abr Enhanced is expected to generate 1.96 times less return on investment than Cullen Small. In addition to that, Abr Enhanced is 1.05 times more volatile than Cullen Small Cap. It trades about 0.05 of its total potential returns per unit of risk. Cullen Small Cap is currently generating about 0.1 per unit of volatility. If you would invest  1,181  in Cullen Small Cap on October 25, 2024 and sell it today you would earn a total of  28.00  from holding Cullen Small Cap or generate 2.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Abr Enhanced Short  vs.  Cullen Small Cap

Abr Enhanced Short

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Abr Enhanced Short are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Abr Enhanced may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cullen Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cullen Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Abr Enhanced and Cullen Small

The main advantage of trading using opposite Abr Enhanced and Cullen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abr Enhanced position performs unexpectedly, Cullen Small 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 Small will offset losses from the drop in Cullen Small's long position.

The idea behind Abr Enhanced Short and Cullen Small Cap 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.