Correlation Between Stellar and Advent Claymore

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Can any of the company-specific risk be diversified away by investing in both Stellar 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 Stellar and Advent Claymore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and Advent Claymore Convertible, you can compare the effects of market volatilities on Stellar 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 Stellar with a short position of Advent Claymore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Advent Claymore.

Diversification Opportunities for Stellar and Advent Claymore

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Stellar and Advent is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Stellar 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 Stellar 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 Stellar 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 Stellar i.e., Stellar and Advent Claymore go up and down completely randomly.

Pair Corralation between Stellar and Advent Claymore

Assuming the 90 days trading horizon Stellar is expected to generate 12.53 times more return on investment than Advent Claymore. However, Stellar is 12.53 times more volatile than Advent Claymore Convertible. It trades about 0.03 of its potential returns per unit of risk. Advent Claymore Convertible is currently generating about -0.05 per unit of risk. If you would invest  44.00  in Stellar on October 25, 2024 and sell it today you would lose (1.00) from holding Stellar or give up 2.27% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy90.48%
ValuesDaily Returns

Stellar  vs.  Advent Claymore Convertible

 Performance 
       Timeline  
Stellar 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.
Advent Claymore Conv 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Advent Claymore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stellar and Advent Claymore Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stellar and Advent Claymore

The main advantage of trading using opposite Stellar and Advent Claymore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar 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.
The idea behind Stellar and Advent Claymore Convertible pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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