Correlation Between Madison Ered and Advent Claymore
Can any of the company-specific risk be diversified away by investing in both Madison Ered 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 Madison Ered and Advent Claymore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madison Ered Call and Advent Claymore Convertible, you can compare the effects of market volatilities on Madison Ered 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 Madison Ered with a short position of Advent Claymore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Ered and Advent Claymore.
Diversification Opportunities for Madison Ered and Advent Claymore
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Madison and Advent is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Madison Ered Call 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 Madison Ered 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 Madison Ered Call 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 Madison Ered i.e., Madison Ered and Advent Claymore go up and down completely randomly.
Pair Corralation between Madison Ered and Advent Claymore
Assuming the 90 days horizon Madison Ered Call is expected to under-perform the Advent Claymore. But the mutual fund apears to be less risky and, when comparing its historical volatility, Madison Ered Call is 1.84 times less risky than Advent Claymore. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Advent Claymore Convertible is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,177 in Advent Claymore Convertible on September 15, 2024 and sell it today you would earn a total of 46.00 from holding Advent Claymore Convertible or generate 3.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Madison Ered Call vs. Advent Claymore Convertible
Performance |
Timeline |
Madison Ered Call |
Advent Claymore Conv |
Madison Ered and Advent Claymore Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Madison Ered and Advent Claymore
The main advantage of trading using opposite Madison Ered and Advent Claymore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Ered 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.Madison Ered vs. Advent Claymore Convertible | Madison Ered vs. Virtus Convertible | Madison Ered vs. Fidelity Sai Convertible | Madison Ered vs. Putnam Convertible Incm Gwth |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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