Correlation Between Advent Claymore and Pimco Rae

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

Diversification Opportunities for Advent Claymore and Pimco Rae

0.45

Correlation Coefficient

Advent Claymore  Pimco Rae

Very weak diversification

The 3 months correlation between Advent and Pimco is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Pimco Rae Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Rae Worldwide 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 Pimco Rae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Rae Worldwide has no effect on the direction of Advent Claymore i.e., Advent Claymore and Pimco Rae go up and down completely randomly.

Pair Corralation between Advent Claymore and Pimco Rae

Considering the 90-day investment horizon Advent Claymore Convertible is expected to generate 1.83 times more return on investment than Pimco Rae. However, Advent Claymore is 1.83 times more volatile than Pimco Rae Worldwide. It trades about 0.14 of its potential returns per unit of risk. Pimco Rae Worldwide is currently generating about 0.09 per unit of risk. If you would invest  1,001  in Advent Claymore Convertible on September 18, 2024 and sell it today you would earn a total of  222.00  from holding Advent Claymore Convertible or generate 22.18% 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.  Pimco Rae Worldwide

Advent Claymore Conv

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite quite unsteady basic indicators, Advent Claymore may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pimco Rae Worldwide

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Rae Worldwide has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Pimco Rae 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 Pimco Rae

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

The idea behind Advent Claymore Convertible and Pimco Rae Worldwide 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.