Correlation Between Advent Claymore and American Funds

Can any of the company-specific risk be diversified away by investing in both Advent Claymore and American Funds 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 American Funds 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 American Funds 2055, you can compare the effects of market volatilities on Advent Claymore and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Claymore and American Funds.

Diversification Opportunities for Advent Claymore and American Funds

0.4

Correlation Coefficient

Advent Claymore  American Funds

Very weak diversification

The 3 months correlation between Advent and American is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and American Funds 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2055 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2055 has no effect on the direction of Advent Claymore i.e., Advent Claymore and American Funds go up and down completely randomly.

Pair Corralation between Advent Claymore and American Funds

Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 1.13 times more return on investment than American Funds. However, Advent Claymore is 1.13 times more volatile than American Funds 2055. It trades about 0.17 of its potential returns per unit of risk. American Funds 2055 is currently generating about -0.11 per unit of risk. If you would invest  1,124  in Advent Claymore Convertible on October 7, 2024 and sell it today you would earn a total of  72.00  from holding Advent Claymore Convertible or generate 6.41% 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.  American Funds 2055

Advent Claymore Conv

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 8 (%) 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 current stock price mess, may contribute to short-term losses for the institutional investors.

American Funds 2055

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Funds 2055 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, American Funds 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 American Funds

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

The idea behind Advent Claymore Convertible and American Funds 2055 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..