Correlation Between Advent Claymore and Prudential Health
Can any of the company-specific risk be diversified away by investing in both Advent Claymore and Prudential Health 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 Prudential Health 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 Prudential Health Sciences, you can compare the effects of market volatilities on Advent Claymore and Prudential Health 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 Prudential Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Claymore and Prudential Health.
Diversification Opportunities for Advent Claymore and Prudential Health
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advent and Prudential is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Prudential Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Health 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 Prudential Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Health has no effect on the direction of Advent Claymore i.e., Advent Claymore and Prudential Health go up and down completely randomly.
Pair Corralation between Advent Claymore and Prudential Health
Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 1.05 times more return on investment than Prudential Health. However, Advent Claymore is 1.05 times more volatile than Prudential Health Sciences. It trades about 0.09 of its potential returns per unit of risk. Prudential Health Sciences is currently generating about -0.08 per unit of risk. If you would invest 1,160 in Advent Claymore Convertible on September 2, 2024 and sell it today you would earn a total of 58.00 from holding Advent Claymore Convertible or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advent Claymore Convertible vs. Prudential Health Sciences
Performance |
| Timeline |
| Advent Claymore Conv |
| Prudential Health |
Advent Claymore and Prudential Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advent Claymore and Prudential Health
The main advantage of trading using opposite Advent Claymore and Prudential Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Claymore position performs unexpectedly, Prudential Health 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 Prudential Health will offset losses from the drop in Prudential Health's 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 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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