Correlation Between Advent Claymore and Telecommunications
Can any of the company-specific risk be diversified away by investing in both Advent Claymore and Telecommunications 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 Telecommunications 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 Telecommunications Portfolio Fidelity, you can compare the effects of market volatilities on Advent Claymore and Telecommunications 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 Telecommunications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Claymore and Telecommunications.
Diversification Opportunities for Advent Claymore and Telecommunications
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Advent and Telecommunications is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Telecommunications Portfolio F in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecommunications 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 Telecommunications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecommunications has no effect on the direction of Advent Claymore i.e., Advent Claymore and Telecommunications go up and down completely randomly.
Pair Corralation between Advent Claymore and Telecommunications
Assuming the 90 days horizon Advent Claymore Convertible is expected to generate 0.53 times more return on investment than Telecommunications. However, Advent Claymore Convertible is 1.9 times less risky than Telecommunications. It trades about 0.23 of its potential returns per unit of risk. Telecommunications Portfolio Fidelity is currently generating about 0.05 per unit of risk. If you would invest 1,226 in Advent Claymore Convertible on October 28, 2024 and sell it today you would earn a total of 27.00 from holding Advent Claymore Convertible or generate 2.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advent Claymore Convertible vs. Telecommunications Portfolio F
Performance |
| Timeline |
| Advent Claymore Conv |
| Telecommunications |
Advent Claymore and Telecommunications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advent Claymore and Telecommunications
The main advantage of trading using opposite Advent Claymore and Telecommunications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Claymore position performs unexpectedly, Telecommunications 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 Telecommunications will offset losses from the drop in Telecommunications' long position.| Advent Claymore vs. Vanguard Total Stock | Advent Claymore vs. Vanguard 500 Index | Advent Claymore vs. Vanguard Total Stock | Advent Claymore vs. Vanguard Total Stock |
| Telecommunications vs. Multisector Bond Sma | Telecommunications vs. T Rowe Price | Telecommunications vs. Bbh Intermediate Municipal | Telecommunications vs. Old Westbury Municipal |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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