Correlation Between Energy Services and Advent Claymore
Can any of the company-specific risk be diversified away by investing in both Energy Services 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 Energy Services and Advent Claymore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Services Fund and Advent Claymore Convertible, you can compare the effects of market volatilities on Energy Services 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 Energy Services with a short position of Advent Claymore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Services and Advent Claymore.
Diversification Opportunities for Energy Services and Advent Claymore
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Energy and Advent is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services Fund 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 Energy Services 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 Energy Services Fund 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 Energy Services i.e., Energy Services and Advent Claymore go up and down completely randomly.
Pair Corralation between Energy Services and Advent Claymore
Assuming the 90 days horizon Energy Services is expected to generate 3.79 times less return on investment than Advent Claymore. In addition to that, Energy Services is 1.95 times more volatile than Advent Claymore Convertible. It trades about 0.02 of its total potential returns per unit of risk. Advent Claymore Convertible is currently generating about 0.15 per unit of volatility. If you would invest 882.00 in Advent Claymore Convertible on September 3, 2024 and sell it today you would earn a total of 338.00 from holding Advent Claymore Convertible or generate 38.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Services Fund vs. Advent Claymore Convertible
Performance |
| Timeline |
| Energy Services |
| Advent Claymore Conv |
Energy Services and Advent Claymore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Services and Advent Claymore
The main advantage of trading using opposite Energy Services and Advent Claymore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Services 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.| Energy Services vs. Angel Oak Multi Strategy | Energy Services vs. Dodge Cox Emerging | Energy Services vs. Legg Mason Partners | Energy Services vs. Mondrian Emerging Markets |
| Advent Claymore vs. Tekla Healthcare Investors | Advent Claymore vs. Tekla Life Sciences | Advent Claymore vs. Cohen Steers Reit | Advent Claymore vs. XAI Octagon Floating |
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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