Correlation Between Advent Claymore and Virtus Convertible

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

Diversification Opportunities for Advent Claymore and Virtus Convertible

0.55

Correlation Coefficient

Advent Claymore  Virtus Convertible

Very weak diversification

The 3 months correlation between Advent and Virtus is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Virtus Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Convertible 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 Virtus Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Convertible has no effect on the direction of Advent Claymore i.e., Advent Claymore and Virtus Convertible go up and down completely randomly.

Pair Corralation between Advent Claymore and Virtus Convertible

Considering the 90-day investment horizon Advent Claymore is expected to generate 2.35 times less return on investment than Virtus Convertible. In addition to that, Advent Claymore is 1.72 times more volatile than Virtus Convertible. It trades about 0.09 of its total potential returns per unit of risk. Virtus Convertible is currently generating about 0.37 per unit of volatility. If you would invest  3,289  in Virtus Convertible on August 31, 2024 and sell it today you would earn a total of  433.00  from holding Virtus Convertible or generate 13.17% return on investment over 90 days.

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

Advent Claymore Convertible  vs.  Virtus Convertible

Advent Claymore Conv

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent basic indicators, Advent Claymore is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Virtus Convertible

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Convertible are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Virtus Convertible may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Advent Claymore and Virtus Convertible

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

The idea behind Advent Claymore Convertible and Virtus Convertible 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.