Correlation Between Blackrock Natural and Advent Claymore

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

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

Diversification Opportunities for Blackrock Natural and Advent Claymore

0.39

Correlation Coefficient

Blackrock Natural  Advent Claymore

Weak diversification

The 3 months correlation between Blackrock and Advent is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Natural Resources 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 Blackrock Natural 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 Blackrock Natural Resources 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 Blackrock Natural i.e., Blackrock Natural and Advent Claymore go up and down completely randomly.

Pair Corralation between Blackrock Natural and Advent Claymore

Assuming the 90 days horizon Blackrock Natural Resources is expected to generate 1.3 times more return on investment than Advent Claymore. However, Blackrock Natural is 1.3 times more volatile than Advent Claymore Convertible. It trades about 0.16 of its potential returns per unit of risk. Advent Claymore Convertible is currently generating about 0.04 per unit of risk. If you would invest  2,638  in Blackrock Natural Resources on December 29, 2024 and sell it today you would earn a total of  247.00  from holding Blackrock Natural Resources or generate 9.36% return on investment over 90 days.

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

Blackrock Natural Resources  vs.  Advent Claymore Convertible

Blackrock Natural

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Natural Resources are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Blackrock Natural may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 2 (%) 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 Blackrock Natural and Advent Claymore

The main advantage of trading using opposite Blackrock Natural and Advent Claymore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Natural 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 Blackrock Natural Resources 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.