Correlation Between Advent Claymore and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Advent Claymore and Absolute Convertible 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 Absolute Convertible 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 Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Advent Claymore and Absolute Convertible 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 Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Claymore and Absolute Convertible.
Diversification Opportunities for Advent Claymore and Absolute Convertible
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Advent and Absolute is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible 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 Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Advent Claymore i.e., Advent Claymore and Absolute Convertible go up and down completely randomly.
Pair Corralation between Advent Claymore and Absolute Convertible
Assuming the 90 days horizon Advent Claymore Convertible is expected to generate 8.74 times more return on investment than Absolute Convertible. However, Advent Claymore is 8.74 times more volatile than Absolute Convertible Arbitrage. It trades about 0.14 of its potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.49 per unit of risk. 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advent Claymore Convertible vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Advent Claymore Conv |
| Absolute Convertible |
Advent Claymore and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advent Claymore and Absolute Convertible
The main advantage of trading using opposite Advent Claymore and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Claymore position performs unexpectedly, Absolute Convertible 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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