Correlation Between Advent Claymore and Abr Enhanced

Can any of the company-specific risk be diversified away by investing in both Advent Claymore and Abr Enhanced 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 Abr Enhanced 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 Abr Enhanced Short, you can compare the effects of market volatilities on Advent Claymore and Abr Enhanced 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 Abr Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Claymore and Abr Enhanced.

Diversification Opportunities for Advent Claymore and Abr Enhanced

0.81

Correlation Coefficient

Advent Claymore  Abr Enhanced

Very poor diversification

The 3 months correlation between Advent and Abr is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Abr Enhanced Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abr Enhanced Short 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 Abr Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abr Enhanced Short has no effect on the direction of Advent Claymore i.e., Advent Claymore and Abr Enhanced go up and down completely randomly.

Pair Corralation between Advent Claymore and Abr Enhanced

Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 0.54 times more return on investment than Abr Enhanced. However, Advent Claymore Convertible is 1.84 times less risky than Abr Enhanced. It trades about 0.2 of its potential returns per unit of risk. Abr Enhanced Short is currently generating about 0.07 per unit of risk. If you would invest  1,117  in Advent Claymore Convertible on September 12, 2024 and sell it today you would earn a total of  119.00  from holding Advent Claymore Convertible or generate 10.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Advent Claymore Convertible  vs.  Abr Enhanced Short

Advent Claymore Conv

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. Despite quite unsteady basic indicators, Advent Claymore may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Abr Enhanced Short

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Abr Enhanced Short are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Abr Enhanced may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Advent Claymore and Abr Enhanced

The main advantage of trading using opposite Advent Claymore and Abr Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Claymore position performs unexpectedly, Abr Enhanced 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 Abr Enhanced will offset losses from the drop in Abr Enhanced's long position.

The idea behind Advent Claymore Convertible and Abr Enhanced Short 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..