Correlation Between Advent Claymore and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Advent Claymore 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 Advent Claymore and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advent Claymore Convertible and Dow Jones Industrial, you can compare the effects of market volatilities on Advent Claymore 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 Advent Claymore with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Claymore and Dow Jones.
Diversification Opportunities for Advent Claymore and Dow Jones
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Advent and Dow is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible 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 Advent Claymore 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 Advent Claymore Convertible 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 Advent Claymore i.e., Advent Claymore and Dow Jones go up and down completely randomly.
Pair Corralation between Advent Claymore and Dow Jones
Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 0.65 times more return on investment than Dow Jones. However, Advent Claymore Convertible is 1.55 times less risky than Dow Jones. It trades about 0.4 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of risk. If you would invest 1,121 in Advent Claymore Convertible on August 24, 2024 and sell it today you would earn a total of 65.00 from holding Advent Claymore Convertible or generate 5.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advent Claymore Convertible vs. Dow Jones Industrial
Performance |
| Timeline |
Advent Claymore and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Advent Claymore Convertible
Pair trading matchups for Advent Claymore
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Advent Claymore and Dow Jones
The main advantage of trading using opposite Advent Claymore and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Claymore 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.| Advent Claymore vs. Nuveen Global High | Advent Claymore vs. Blackstone Gso Strategic | Advent Claymore vs. Thornburg Income Builder | Advent Claymore vs. Western Asset Diversified |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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