Correlation Between Advent Claymore and Oil Equipment

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

Diversification Opportunities for Advent Claymore and Oil Equipment

0.32

Correlation Coefficient

Advent Claymore  Oil Equipment

Weak diversification

The 3 months correlation between Advent and Oil is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Oil Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Equipment Services 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 Oil Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Equipment Services has no effect on the direction of Advent Claymore i.e., Advent Claymore and Oil Equipment go up and down completely randomly.

Pair Corralation between Advent Claymore and Oil Equipment

Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 0.18 times more return on investment than Oil Equipment. However, Advent Claymore Convertible is 5.44 times less risky than Oil Equipment. It trades about -0.07 of its potential returns per unit of risk. Oil Equipment Services is currently generating about -0.29 per unit of risk. If you would invest  1,202  in Advent Claymore Convertible on December 5, 2024 and sell it today you would lose (11.00) from holding Advent Claymore Convertible or give up 0.92% of portfolio value over 90 days.

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

Advent Claymore Convertible  vs.  Oil Equipment Services

Advent Claymore Conv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advent Claymore Convertible has generated negative risk-adjusted returns adding no value to fund investors. 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.

Oil Equipment Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oil Equipment Services has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Advent Claymore and Oil Equipment

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

The idea behind Advent Claymore Convertible and Oil Equipment Services 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..