Correlation Between Advent Claymore and Gold

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

Diversification Opportunities for Advent Claymore and Gold

-0.73

Correlation Coefficient

Advent Claymore  Gold

Pay attention - limited upside

The 3 months correlation between Advent and Gold is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Gold And Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold And Precious 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 Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold And Precious has no effect on the direction of Advent Claymore i.e., Advent Claymore and Gold go up and down completely randomly.

Pair Corralation between Advent Claymore and Gold

Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 0.38 times more return on investment than Gold. However, Advent Claymore Convertible is 2.62 times less risky than Gold. It trades about 0.3 of its potential returns per unit of risk. Gold And Precious is currently generating about -0.04 per unit of risk. If you would invest  1,168  in Advent Claymore Convertible on September 19, 2024 and sell it today you would earn a total of  46.00  from holding Advent Claymore Convertible or generate 3.94% return on investment over 90 days.

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

Advent Claymore Convertible  vs.  Gold And Precious

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.

Gold And Precious

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold And Precious has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Gold 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 Gold

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

The idea behind Advent Claymore Convertible and Gold And Precious 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.