Correlation Between Advent Claymore and Lkcm Small

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

Diversification Opportunities for Advent Claymore and Lkcm Small

0.68

Correlation Coefficient

Advent Claymore  Lkcm Small

Poor diversification

The 3 months correlation between Advent and Lkcm is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Lkcm Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lkcm Small Cap 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 Lkcm Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lkcm Small Cap has no effect on the direction of Advent Claymore i.e., Advent Claymore and Lkcm Small go up and down completely randomly.

Pair Corralation between Advent Claymore and Lkcm Small

Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 0.91 times more return on investment than Lkcm Small. However, Advent Claymore Convertible is 1.1 times less risky than Lkcm Small. It trades about 0.07 of its potential returns per unit of risk. Lkcm Small Cap is currently generating about 0.06 per unit of risk. If you would invest  867.00  in Advent Claymore Convertible on September 3, 2024 and sell it today you would earn a total of  351.00  from holding Advent Claymore Convertible or generate 40.48% return on investment over 90 days.

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

Advent Claymore Convertible  vs.  Lkcm Small Cap

Advent Claymore Conv

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 6 (%) 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.

Lkcm Small Cap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lkcm Small Cap are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Lkcm Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advent Claymore and Lkcm Small

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

The idea behind Advent Claymore Convertible and Lkcm Small Cap 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.