Correlation Between Advent Claymore and Inverse Russell

Can any of the company-specific risk be diversified away by investing in both Advent Claymore and Inverse Russell 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 Inverse Russell 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 Inverse Russell 2000, you can compare the effects of market volatilities on Advent Claymore and Inverse Russell 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 Inverse Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Claymore and Inverse Russell.

Diversification Opportunities for Advent Claymore and Inverse Russell

-0.82

Correlation Coefficient

Advent Claymore  Inverse Russell

Pay attention - limited upside

The 3 months correlation between Advent and Inverse is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Inverse Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Russell 2000 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 Inverse Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Russell 2000 has no effect on the direction of Advent Claymore i.e., Advent Claymore and Inverse Russell go up and down completely randomly.

Pair Corralation between Advent Claymore and Inverse Russell

Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 0.58 times more return on investment than Inverse Russell. However, Advent Claymore Convertible is 1.73 times less risky than Inverse Russell. It trades about 0.19 of its potential returns per unit of risk. Inverse Russell 2000 is currently generating about -0.15 per unit of risk. If you would invest  1,137  in Advent Claymore Convertible on September 14, 2024 and sell it today you would earn a total of  111.00  from holding Advent Claymore Convertible or generate 9.76% return on investment over 90 days.

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

Advent Claymore Convertible  vs.  Inverse Russell 2000

Advent Claymore Conv

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 14 (%) 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.

Inverse Russell 2000

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inverse Russell 2000 has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Advent Claymore and Inverse Russell

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

The idea behind Advent Claymore Convertible and Inverse Russell 2000 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.