Correlation Between Advent Claymore and International Equity

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

Diversification Opportunities for Advent Claymore and International Equity

-0.51

Correlation Coefficient

Advent Claymore  International Equity

Excellent diversification

The 3 months correlation between Advent and International is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and International Equity Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity 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 International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Advent Claymore i.e., Advent Claymore and International Equity go up and down completely randomly.

Pair Corralation between Advent Claymore and International Equity

Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 1.39 times more return on investment than International Equity. However, Advent Claymore is 1.39 times more volatile than International Equity Index. It trades about 0.05 of its potential returns per unit of risk. International Equity Index is currently generating about -0.06 per unit of risk. If you would invest  1,175  in Advent Claymore Convertible on September 22, 2024 and sell it today you would earn a total of  11.00  from holding Advent Claymore Convertible or generate 0.94% return on investment over 90 days.

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

Advent Claymore Convertible  vs.  International Equity Index

Advent Claymore Conv

Risk-Adjusted Performance

9 of 100

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 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.

International Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Equity Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest abnormal performance, the Fund's technical and 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 International Equity

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

The idea behind Advent Claymore Convertible and International Equity Index 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.