Correlation Between Vanguard 500 and Advent Claymore
Can any of the company-specific risk be diversified away by investing in both Vanguard 500 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 Vanguard 500 and Advent Claymore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard 500 Index and Advent Claymore Convertible, you can compare the effects of market volatilities on Vanguard 500 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 Vanguard 500 with a short position of Advent Claymore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Advent Claymore.
Diversification Opportunities for Vanguard 500 and Advent Claymore
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Advent is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index 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 Vanguard 500 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 Vanguard 500 Index 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 Vanguard 500 i.e., Vanguard 500 and Advent Claymore go up and down completely randomly.
Pair Corralation between Vanguard 500 and Advent Claymore
Assuming the 90 days horizon Vanguard 500 is expected to generate 1.43 times less return on investment than Advent Claymore. In addition to that, Vanguard 500 is 1.67 times more volatile than Advent Claymore Convertible. It trades about 0.06 of its total potential returns per unit of risk. Advent Claymore Convertible is currently generating about 0.14 per unit of volatility. If you would invest 1,232 in Advent Claymore Convertible on October 25, 2024 and sell it today you would earn a total of 16.00 from holding Advent Claymore Convertible or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard 500 Index vs. Advent Claymore Convertible
Performance |
| Timeline |
| Vanguard 500 Index |
| Advent Claymore Conv |
Vanguard 500 and Advent Claymore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard 500 and Advent Claymore
The main advantage of trading using opposite Vanguard 500 and Advent Claymore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 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.| Vanguard 500 vs. Vanguard Total Stock | Vanguard 500 vs. Vanguard Mid Cap Index | Vanguard 500 vs. Vanguard Small Cap Index | Vanguard 500 vs. Vanguard Total Bond |
| Advent Claymore vs. Hewitt Money Market | Advent Claymore vs. Schwab Government Money | Advent Claymore vs. Hsbc Treasury Money | Advent Claymore vs. Dws Government Money |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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