Correlation Between Cullen International and Arbitrage Event
Can any of the company-specific risk be diversified away by investing in both Cullen International and Arbitrage Event 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 International and Arbitrage Event into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cullen International High and The Arbitrage Event Driven, you can compare the effects of market volatilities on Cullen International and Arbitrage Event 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 International with a short position of Arbitrage Event. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullen International and Arbitrage Event.
Diversification Opportunities for Cullen International and Arbitrage Event
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cullen and Arbitrage is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cullen International High and The Arbitrage Event Driven in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Event and Cullen International 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 International High are associated (or correlated) with Arbitrage Event. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Event has no effect on the direction of Cullen International i.e., Cullen International and Arbitrage Event go up and down completely randomly.
Pair Corralation between Cullen International and Arbitrage Event
Assuming the 90 days horizon Cullen International High is expected to under-perform the Arbitrage Event. In addition to that, Cullen International is 2.99 times more volatile than The Arbitrage Event Driven. It trades about -0.02 of its total potential returns per unit of risk. The Arbitrage Event Driven is currently generating about 0.02 per unit of volatility. If you would invest 1,170 in The Arbitrage Event Driven on September 7, 2024 and sell it today you would earn a total of 3.00 from holding The Arbitrage Event Driven or generate 0.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Cullen International High vs. The Arbitrage Event Driven
Performance |
Timeline |
Cullen International High |
Arbitrage Event |
Cullen International and Arbitrage Event Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cullen International and Arbitrage Event
The main advantage of trading using opposite Cullen International and Arbitrage Event positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullen International position performs unexpectedly, Arbitrage Event 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 Arbitrage Event will offset losses from the drop in Arbitrage Event's long position.The idea behind Cullen International High and The Arbitrage Event Driven 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.
Arbitrage Event vs. Aqr Diversified Arbitrage | Arbitrage Event vs. Baron Emerging Markets | Arbitrage Event vs. The Arbitrage Fund | Arbitrage Event vs. Brandes Emerging Markets |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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