Correlation Between Cullen International and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Cullen International and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Cullen International and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullen International and Dow Jones.
Diversification Opportunities for Cullen International and Dow Jones
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cullen and Dow is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cullen International High and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Cullen International i.e., Cullen International and Dow Jones go up and down completely randomly.
Pair Corralation between Cullen International and Dow Jones
Assuming the 90 days horizon Cullen International is expected to generate 1.2 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Cullen International High is 1.04 times less risky than Dow Jones. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,275,754 in Dow Jones Industrial on September 7, 2024 and sell it today you would earn a total of 1,200,817 from holding Dow Jones Industrial or generate 36.66% 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. Dow Jones Industrial
Performance |
Timeline |
Cullen International and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Cullen International High
Pair trading matchups for Cullen International
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Cullen International and Dow Jones
The main advantage of trading using opposite Cullen International and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullen International position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.Cullen International vs. T Rowe Price | Cullen International vs. Scharf Global Opportunity | Cullen International vs. Red Oak Technology | Cullen International vs. Rbb Fund |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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