Correlation Between Unconstrained Bond and Advent Claymore

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

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

Diversification Opportunities for Unconstrained Bond and Advent Claymore

0.02

Correlation Coefficient

Unconstrained Bond  Advent Claymore

Significant diversification

The 3 months correlation between Unconstrained and Advent is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Unconstrained Bond Series 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 Unconstrained Bond 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 Unconstrained Bond Series 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 Unconstrained Bond i.e., Unconstrained Bond and Advent Claymore go up and down completely randomly.

Pair Corralation between Unconstrained Bond and Advent Claymore

Assuming the 90 days horizon Unconstrained Bond Series is expected to generate 0.2 times more return on investment than Advent Claymore. However, Unconstrained Bond Series is 5.09 times less risky than Advent Claymore. It trades about 0.2 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  973.00  in Unconstrained Bond Series on December 30, 2024 and sell it today you would earn a total of  17.00  from holding Unconstrained Bond Series or generate 1.75% return on investment over 90 days.

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

Unconstrained Bond Series  vs.  Advent Claymore Convertible

Unconstrained Bond Series

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unconstrained Bond Series are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Unconstrained Bond 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

Weak

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 Unconstrained Bond and Advent Claymore

The main advantage of trading using opposite Unconstrained Bond and Advent Claymore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unconstrained Bond 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 Unconstrained Bond Series 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.