Correlation Between Advent Claymore and Mesirow Financial

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

Diversification Opportunities for Advent Claymore and Mesirow Financial

0.43

Correlation Coefficient

Advent Claymore  Mesirow Financial

Very weak diversification

The 3 months correlation between Advent and MESIROW is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Mesirow Financial Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesirow Financial Small 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 Mesirow Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesirow Financial Small has no effect on the direction of Advent Claymore i.e., Advent Claymore and Mesirow Financial go up and down completely randomly.

Pair Corralation between Advent Claymore and Mesirow Financial

Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 0.45 times more return on investment than Mesirow Financial. However, Advent Claymore Convertible is 2.23 times less risky than Mesirow Financial. It trades about 0.78 of its potential returns per unit of risk. Mesirow Financial Small is currently generating about 0.19 per unit of risk. If you would invest  1,104  in Advent Claymore Convertible on August 31, 2024 and sell it today you would earn a total of  116.00  from holding Advent Claymore Convertible or generate 10.51% 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.  Mesirow Financial Small

Advent Claymore Conv

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 7 (%) 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.

Mesirow Financial Small

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mesirow Financial Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Mesirow Financial may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Advent Claymore and Mesirow Financial

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

The idea behind Advent Claymore Convertible and Mesirow Financial Small 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.