Correlation Between Advent Claymore and Fidelity Series

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

Diversification Opportunities for Advent Claymore and Fidelity Series

0.84

Correlation Coefficient

Advent Claymore  Fidelity Series

Very poor diversification

The 3 months correlation between Advent and Fidelity is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Fidelity Series Blue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Blue 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 Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Blue has no effect on the direction of Advent Claymore i.e., Advent Claymore and Fidelity Series go up and down completely randomly.

Pair Corralation between Advent Claymore and Fidelity Series

Considering the 90-day investment horizon Advent Claymore Convertible is expected to under-perform the Fidelity Series. But the fund apears to be less risky and, when comparing its historical volatility, Advent Claymore Convertible is 1.07 times less risky than Fidelity Series. The fund trades about -0.08 of its potential returns per unit of risk. The Fidelity Series Blue is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,047  in Fidelity Series Blue on October 6, 2024 and sell it today you would lose (18.00) from holding Fidelity Series Blue or give up 0.88% of portfolio value over 90 days.

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

Advent Claymore Convertible  vs.  Fidelity Series Blue

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 latest stock price mess, may contribute to short-term losses for the institutional investors.

Fidelity Series Blue

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Series Blue are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fidelity Series may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Advent Claymore and Fidelity Series

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

The idea behind Advent Claymore Convertible and Fidelity Series Blue 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.