Correlation Between Advent Claymore and Columbia Pyrford

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

Diversification Opportunities for Advent Claymore and Columbia Pyrford

-0.6

Correlation Coefficient

Advent Claymore  Columbia Pyrford

Excellent diversification

The 3 months correlation between Advent and Columbia is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Columbia Pyrford International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Pyrford Int 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 Columbia Pyrford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Pyrford Int has no effect on the direction of Advent Claymore i.e., Advent Claymore and Columbia Pyrford go up and down completely randomly.

Pair Corralation between Advent Claymore and Columbia Pyrford

Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 1.38 times more return on investment than Columbia Pyrford. However, Advent Claymore is 1.38 times more volatile than Columbia Pyrford International. It trades about 0.11 of its potential returns per unit of risk. Columbia Pyrford International is currently generating about -0.12 per unit of risk. If you would invest  1,148  in Advent Claymore Convertible on September 4, 2024 and sell it today you would earn a total of  72.00  from holding Advent Claymore Convertible or generate 6.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Advent Claymore Convertible  vs.  Columbia Pyrford International

Advent Claymore Conv

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 8 (%) 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.

Columbia Pyrford Int

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Pyrford International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Columbia Pyrford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Advent Claymore and Columbia Pyrford

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

The idea behind Advent Claymore Convertible and Columbia Pyrford International 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.