Correlation Between Advent Claymore and Aqr Large

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

Diversification Opportunities for Advent Claymore and Aqr Large

0.6

Correlation Coefficient

Advent Claymore  Aqr Large

Poor diversification

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

Pair Corralation between Advent Claymore and Aqr Large

Considering the 90-day investment horizon Advent Claymore is expected to generate 1.79 times less return on investment than Aqr Large. In addition to that, Advent Claymore is 1.13 times more volatile than Aqr Large Cap. It trades about 0.11 of its total potential returns per unit of risk. Aqr Large Cap is currently generating about 0.22 per unit of volatility. If you would invest  1,953  in Aqr Large Cap on September 5, 2024 and sell it today you would earn a total of  231.00  from holding Aqr Large Cap or generate 11.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Advent Claymore Convertible  vs.  Aqr Large Cap

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 unsteady basic indicators, Advent Claymore may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aqr Large Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Large Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aqr Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Advent Claymore and Aqr Large

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

The idea behind Advent Claymore Convertible and Aqr Large Cap 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.