Correlation Between Bridge Builder and Advent Claymore

Can any of the company-specific risk be diversified away by investing in both Bridge Builder and Advent Claymore 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 Bridge Builder and Advent Claymore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bridge Builder Trust and Advent Claymore Convertible, you can compare the effects of market volatilities on Bridge Builder and Advent Claymore 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 Bridge Builder with a short position of Advent Claymore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridge Builder and Advent Claymore.

Diversification Opportunities for Bridge Builder and Advent Claymore

0.76

Correlation Coefficient

Bridge Builder  Advent Claymore

Poor diversification

The 3 months correlation between Bridge and Advent is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bridge Builder Trust and Advent Claymore Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Claymore Conv and Bridge Builder 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 Bridge Builder Trust are associated (or correlated) with Advent Claymore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Claymore Conv has no effect on the direction of Bridge Builder i.e., Bridge Builder and Advent Claymore go up and down completely randomly.

Pair Corralation between Bridge Builder and Advent Claymore

Assuming the 90 days horizon Bridge Builder Trust is expected to under-perform the Advent Claymore. In addition to that, Bridge Builder is 1.51 times more volatile than Advent Claymore Convertible. It trades about -0.07 of its total potential returns per unit of risk. Advent Claymore Convertible is currently generating about 0.05 per unit of volatility. If you would invest  1,142  in Advent Claymore Convertible on December 28, 2024 and sell it today you would earn a total of  25.00  from holding Advent Claymore Convertible or generate 2.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bridge Builder Trust  vs.  Advent Claymore Convertible

Bridge Builder Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bridge Builder Trust has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Bridge Builder is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Advent Claymore Conv

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 4 (%) 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.

Pair Trading with Bridge Builder and Advent Claymore

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

The idea behind Bridge Builder Trust and Advent Claymore Convertible 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.