Correlation Between Advent Claymore and Great West

Can any of the company-specific risk be diversified away by investing in both Advent Claymore and Great West 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 Great West 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 Great West Lifetime 2040, you can compare the effects of market volatilities on Advent Claymore and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Claymore and Great West.

Diversification Opportunities for Advent Claymore and Great West

0.63

Correlation Coefficient

Advent Claymore  Great West

Poor diversification

The 3 months correlation between Advent and Great is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Great West Lifetime 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifetime 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifetime has no effect on the direction of Advent Claymore i.e., Advent Claymore and Great West go up and down completely randomly.

Pair Corralation between Advent Claymore and Great West

Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 1.73 times more return on investment than Great West. However, Advent Claymore is 1.73 times more volatile than Great West Lifetime 2040. It trades about 0.2 of its potential returns per unit of risk. Great West Lifetime 2040 is currently generating about 0.09 per unit of risk. If you would invest  1,134  in Advent Claymore Convertible on September 13, 2024 and sell it today you would earn a total of  116.00  from holding Advent Claymore Convertible or generate 10.23% 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.  Great West Lifetime 2040

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.

Great West Lifetime

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great West Lifetime 2040 are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Great West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Advent Claymore and Great West

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

The idea behind Advent Claymore Convertible and Great West Lifetime 2040 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.