Correlation Between Dow Jones and Advent Claymore
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Advent Claymore 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 Dow Jones and Advent Claymore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Advent Claymore Convertible, you can compare the effects of market volatilities on Dow Jones and Advent Claymore 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 Dow Jones with a short position of Advent Claymore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Advent Claymore.
Diversification Opportunities for Dow Jones and Advent Claymore
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Advent is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Advent Claymore Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Claymore Conv and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Advent Claymore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Claymore Conv has no effect on the direction of Dow Jones i.e., Dow Jones and Advent Claymore go up and down completely randomly.
Pair Corralation between Dow Jones and Advent Claymore
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Advent Claymore. In addition to that, Dow Jones is 1.07 times more volatile than Advent Claymore Convertible. It trades about -0.24 of its total potential returns per unit of risk. Advent Claymore Convertible is currently generating about -0.18 per unit of volatility. If you would invest 1,277 in Advent Claymore Convertible on October 10, 2024 and sell it today you would lose (33.00) from holding Advent Claymore Convertible or give up 2.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Advent Claymore Convertible
Performance |
| Timeline |
Dow Jones and Advent Claymore Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Advent Claymore Convertible
Pair trading matchups for Advent Claymore
Pair Trading with Dow Jones and Advent Claymore
The main advantage of trading using opposite Dow Jones and Advent Claymore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Advent Claymore 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 Advent Claymore will offset losses from the drop in Advent Claymore's long position.| Dow Jones vs. Thai Beverage PCL | Dow Jones vs. ServiceNow | Dow Jones vs. Loud Beverage Group | Dow Jones vs. Suntory Beverage Food |
| Advent Claymore vs. Rbc Short Duration | Advent Claymore vs. Lord Abbett Short | Advent Claymore vs. Ultra Short Fixed Income | Advent Claymore vs. Aamhimco Short Duration |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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