Correlation Between Advent Claymore and Plumb Balanced
Can any of the company-specific risk be diversified away by investing in both Advent Claymore and Plumb Balanced 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 Plumb Balanced 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 Plumb Balanced, you can compare the effects of market volatilities on Advent Claymore and Plumb Balanced 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 Plumb Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Claymore and Plumb Balanced.
Diversification Opportunities for Advent Claymore and Plumb Balanced
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Advent and Plumb is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Plumb Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumb Balanced 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 Plumb Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumb Balanced has no effect on the direction of Advent Claymore i.e., Advent Claymore and Plumb Balanced go up and down completely randomly.
Pair Corralation between Advent Claymore and Plumb Balanced
Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 0.96 times more return on investment than Plumb Balanced. However, Advent Claymore Convertible is 1.05 times less risky than Plumb Balanced. It trades about 0.36 of its potential returns per unit of risk. Plumb Balanced is currently generating about 0.12 per unit of risk. If you would invest 1,144 in Advent Claymore Convertible on September 13, 2024 and sell it today you would earn a total of 106.00 from holding Advent Claymore Convertible or generate 9.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Advent Claymore Convertible vs. Plumb Balanced
Performance |
| Timeline |
| Advent Claymore Conv |
| Plumb Balanced |
Advent Claymore and Plumb Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advent Claymore and Plumb Balanced
The main advantage of trading using opposite Advent Claymore and Plumb Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Claymore position performs unexpectedly, Plumb Balanced 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 Plumb Balanced will offset losses from the drop in Plumb Balanced'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 |
| Plumb Balanced vs. Advent Claymore Convertible | Plumb Balanced vs. Lord Abbett Convertible | Plumb Balanced vs. Absolute Convertible Arbitrage | Plumb Balanced vs. Gabelli Convertible And |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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