Correlation Between Advent Claymore and New Perspective
Can any of the company-specific risk be diversified away by investing in both Advent Claymore and New Perspective 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 New Perspective 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 New Perspective Fund, you can compare the effects of market volatilities on Advent Claymore and New Perspective 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 New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Claymore and New Perspective.
Diversification Opportunities for Advent Claymore and New Perspective
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advent and New is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective 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 New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Advent Claymore i.e., Advent Claymore and New Perspective go up and down completely randomly.
Pair Corralation between Advent Claymore and New Perspective
Assuming the 90 days horizon Advent Claymore Convertible is expected to generate 0.54 times more return on investment than New Perspective. However, Advent Claymore Convertible is 1.84 times less risky than New Perspective. It trades about -0.43 of its potential returns per unit of risk. New Perspective Fund is currently generating about -0.25 per unit of risk. If you would invest 1,261 in Advent Claymore Convertible on December 17, 2024 and sell it today you would lose (73.00) from holding Advent Claymore Convertible or give up 5.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advent Claymore Convertible vs. New Perspective Fund
Performance |
| Timeline |
| Advent Claymore Conv |
| New Perspective |
Advent Claymore and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advent Claymore and New Perspective
The main advantage of trading using opposite Advent Claymore and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Claymore position performs unexpectedly, New Perspective 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 New Perspective will offset losses from the drop in New Perspective's long position.| Advent Claymore vs. Rbc Ultra Short Fixed | ||
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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