Correlation Between Advent Claymore and Science Technology

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

Diversification Opportunities for Advent Claymore and Science Technology

0.84

Correlation Coefficient

Advent Claymore  Science Technology

Very poor diversification

The 3 months correlation between Advent and Science is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Science Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Technology 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 Science Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Technology has no effect on the direction of Advent Claymore i.e., Advent Claymore and Science Technology go up and down completely randomly.

Pair Corralation between Advent Claymore and Science Technology

Considering the 90-day investment horizon Advent Claymore is expected to generate 1.85 times less return on investment than Science Technology. But when comparing it to its historical volatility, Advent Claymore Convertible is 1.6 times less risky than Science Technology. It trades about 0.1 of its potential returns per unit of risk. Science Technology Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,643  in Science Technology Fund on September 24, 2024 and sell it today you would earn a total of  250.00  from holding Science Technology Fund or generate 9.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Advent Claymore Convertible  vs.  Science Technology Fund

Advent Claymore Conv

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 7 (%) 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.

Science Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Science Technology Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Science Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Advent Claymore and Science Technology

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

The idea behind Advent Claymore Convertible and Science Technology Fund 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.