Correlation Between Advent Claymore and Small Cap
Can any of the company-specific risk be diversified away by investing in both Advent Claymore and Small Cap 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 Small Cap 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 Small Cap Stock, you can compare the effects of market volatilities on Advent Claymore and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Claymore and Small Cap.
Diversification Opportunities for Advent Claymore and Small Cap
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Advent and Small is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Stock has no effect on the direction of Advent Claymore i.e., Advent Claymore and Small Cap go up and down completely randomly.
Pair Corralation between Advent Claymore and Small Cap
Assuming the 90 days horizon Advent Claymore Convertible is expected to generate 0.5 times more return on investment than Small Cap. However, Advent Claymore Convertible is 2.0 times less risky than Small Cap. It trades about -0.02 of its potential returns per unit of risk. Small Cap Stock is currently generating about -0.03 per unit of risk. If you would invest 1,236 in Advent Claymore Convertible on October 18, 2024 and sell it today you would lose (19.00) from holding Advent Claymore Convertible or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advent Claymore Convertible vs. Small Cap Stock
Performance |
| Timeline |
| Advent Claymore Conv |
| Small Cap Stock |
Advent Claymore and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advent Claymore and Small Cap
The main advantage of trading using opposite Advent Claymore and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Claymore position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's 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 |
| Small Cap vs. Columbia Convertible Securities | Small Cap vs. Absolute Convertible Arbitrage | Small Cap vs. Allianzgi Convertible Income | Small Cap vs. Advent Claymore Convertible |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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