Correlation Between Advent Claymore and Horizon Spin-off

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

Diversification Opportunities for Advent Claymore and Horizon Spin-off

-0.05

Correlation Coefficient

Advent Claymore  Horizon Spin-off

Good diversification

The 3 months correlation between Advent and Horizon is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Horizon Spin Off And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Spin Off 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 Horizon Spin-off. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Spin Off has no effect on the direction of Advent Claymore i.e., Advent Claymore and Horizon Spin-off go up and down completely randomly.

Pair Corralation between Advent Claymore and Horizon Spin-off

Considering the 90-day investment horizon Advent Claymore is expected to generate 1.9 times less return on investment than Horizon Spin-off. But when comparing it to its historical volatility, Advent Claymore Convertible is 2.0 times less risky than Horizon Spin-off. It trades about 0.07 of its potential returns per unit of risk. Horizon Spin Off And is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,948  in Horizon Spin Off And on November 20, 2024 and sell it today you would earn a total of  1,470  from holding Horizon Spin Off And or generate 75.46% return on investment over 90 days.

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

Advent Claymore Convertible  vs.  Horizon Spin Off And

Advent Claymore Conv

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 9 (%) 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 March 2025.

Horizon Spin Off

Risk-Adjusted Performance

Very Weak

Over the last 90 days Horizon Spin Off And has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Advent Claymore and Horizon Spin-off

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

The idea behind Advent Claymore Convertible and Horizon Spin Off And 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.