Correlation Between Advent Claymore and Jennison Natural

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

Diversification Opportunities for Advent Claymore and Jennison Natural

-0.22

Correlation Coefficient

Advent Claymore  Jennison Natural

Very good diversification

The 3 months correlation between Advent and Jennison is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Jennison Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jennison Natural Res 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 Jennison Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jennison Natural Res has no effect on the direction of Advent Claymore i.e., Advent Claymore and Jennison Natural go up and down completely randomly.

Pair Corralation between Advent Claymore and Jennison Natural

Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 0.79 times more return on investment than Jennison Natural. However, Advent Claymore Convertible is 1.27 times less risky than Jennison Natural. It trades about 0.17 of its potential returns per unit of risk. Jennison Natural Resources is currently generating about -0.07 per unit of risk. If you would invest  1,124  in Advent Claymore Convertible on October 7, 2024 and sell it today you would earn a total of  72.00  from holding Advent Claymore Convertible or generate 6.41% 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.  Jennison Natural Resources

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 current stock price mess, may contribute to short-term losses for the institutional investors.

Jennison Natural Res

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jennison Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Jennison Natural 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 Jennison Natural

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

The idea behind Advent Claymore Convertible and Jennison Natural Resources 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.