Correlation Between James Alpha and Advent Claymore

Can any of the company-specific risk be diversified away by investing in both James Alpha and Advent Claymore 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 James Alpha and Advent Claymore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between James Alpha Structured and Advent Claymore Convertible, you can compare the effects of market volatilities on James Alpha and Advent Claymore 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 James Alpha with a short position of Advent Claymore. Check out your portfolio center. Please also check ongoing floating volatility patterns of James Alpha and Advent Claymore.

Diversification Opportunities for James Alpha and Advent Claymore

0.49

Correlation Coefficient

James Alpha  Advent Claymore

Very weak diversification

The 3 months correlation between James and Advent is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding James Alpha Structured and Advent Claymore Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Claymore Conv and James Alpha 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 James Alpha Structured are associated (or correlated) with Advent Claymore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Claymore Conv has no effect on the direction of James Alpha i.e., James Alpha and Advent Claymore go up and down completely randomly.

Pair Corralation between James Alpha and Advent Claymore

Assuming the 90 days horizon James Alpha is expected to generate 12.15 times less return on investment than Advent Claymore. But when comparing it to its historical volatility, James Alpha Structured is 7.21 times less risky than Advent Claymore. It trades about 0.12 of its potential returns per unit of risk. Advent Claymore Convertible is currently generating about 0.2 of returns per unit of risk over similar time horizon. 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	Weak
Accuracy	100.0%
Values	Daily Returns

James Alpha Structured  vs.  Advent Claymore Convertible

James Alpha Structured

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in James Alpha Structured are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, James Alpha is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with James Alpha and Advent Claymore

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

The idea behind James Alpha Structured and Advent Claymore 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.