Correlation Between Cullen International and Cullen Value

Can any of the company-specific risk be diversified away by investing in both Cullen International 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 International 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 International High and Cullen Value Fund, you can compare the effects of market volatilities on Cullen International 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 International with a short position of Cullen Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullen International and Cullen Value.

Diversification Opportunities for Cullen International and Cullen Value

-0.54

Correlation Coefficient

Cullen International  Cullen Value

Excellent diversification

The 3 months correlation between Cullen and Cullen is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cullen International High 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 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 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 International i.e., Cullen International and Cullen Value go up and down completely randomly.

Pair Corralation between Cullen International and Cullen Value

Assuming the 90 days horizon Cullen International High is expected to under-perform the Cullen Value. But the mutual fund apears to be less risky and, when comparing its historical volatility, Cullen International High is 1.08 times less risky than Cullen Value. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Cullen Value Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,395  in Cullen Value Fund on September 4, 2024 and sell it today you would earn a total of  80.00  from holding Cullen Value Fund or generate 5.73% return on investment over 90 days.

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

Cullen International High  vs.  Cullen Value Fund

Cullen International High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cullen International High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Cullen International 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

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cullen Value Fund are ranked lower than 10 (%) 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 International and Cullen Value

The main advantage of trading using opposite Cullen International and Cullen Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullen International 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 International High 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.