Correlation Between Advent Claymore and Short Oil

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

Diversification Opportunities for Advent Claymore and Short Oil

-0.34

Correlation Coefficient

Advent Claymore  Short Oil

Very good diversification

The 3 months correlation between Advent and Short is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Short Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Oil Gas 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 Short Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Oil Gas has no effect on the direction of Advent Claymore i.e., Advent Claymore and Short Oil go up and down completely randomly.

Pair Corralation between Advent Claymore and Short Oil

Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 0.79 times more return on investment than Short Oil. However, Advent Claymore Convertible is 1.26 times less risky than Short Oil. It trades about 0.06 of its potential returns per unit of risk. Short Oil Gas is currently generating about 0.01 per unit of risk. If you would invest  920.00  in Advent Claymore Convertible on September 19, 2024 and sell it today you would earn a total of  294.00  from holding Advent Claymore Convertible or generate 31.96% return on investment over 90 days.

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

Advent Claymore Convertible  vs.  Short Oil Gas

Advent Claymore Conv

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 13 (%) 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.

Short Oil Gas

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Short Oil Gas are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Short Oil is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Advent Claymore and Short Oil

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

The idea behind Advent Claymore Convertible and Short Oil Gas 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..