Correlation Between Emerald Insights and Advent Claymore

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

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

Diversification Opportunities for Emerald Insights and Advent Claymore

0.82

Correlation Coefficient

Emerald Insights  Advent Claymore

Very poor diversification

The 3 months correlation between Emerald and Advent is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Insights Fund 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 Emerald Insights 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 Emerald Insights Fund 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 Emerald Insights i.e., Emerald Insights and Advent Claymore go up and down completely randomly.

Pair Corralation between Emerald Insights and Advent Claymore

Assuming the 90 days horizon Emerald Insights Fund is expected to under-perform the Advent Claymore. In addition to that, Emerald Insights is 1.14 times more volatile than Advent Claymore Convertible. It trades about -0.1 of its total potential returns per unit of risk. Advent Claymore Convertible is currently generating about -0.08 per unit of volatility. If you would invest  1,220  in Advent Claymore Convertible on October 8, 2024 and sell it today you would lose (24.00) from holding Advent Claymore Convertible or give up 1.97% of portfolio value over 90 days.

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

Emerald Insights Fund  vs.  Advent Claymore Convertible

Emerald Insights

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Insights Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Emerald Insights 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

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

Pair Trading with Emerald Insights and Advent Claymore

The main advantage of trading using opposite Emerald Insights and Advent Claymore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerald Insights 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 Emerald Insights Fund 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.