Correlation Between Invesco Select and Advent Claymore

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

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

Diversification Opportunities for Invesco Select and Advent Claymore

0.83

Correlation Coefficient

Invesco Select  Advent Claymore

Very poor diversification

The 3 months correlation between Invesco and Advent is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Select Risk 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 Invesco Select 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 Invesco Select Risk 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 Invesco Select i.e., Invesco Select and Advent Claymore go up and down completely randomly.

Pair Corralation between Invesco Select and Advent Claymore

Assuming the 90 days horizon Invesco Select Risk is expected to generate 1.0 times more return on investment than Advent Claymore. However, Invesco Select is 1.0 times more volatile than Advent Claymore Convertible. It trades about 0.14 of its potential returns per unit of risk. Advent Claymore Convertible is currently generating about 0.14 per unit of risk. If you would invest  1,123  in Invesco Select Risk on October 25, 2024 and sell it today you would earn a total of  15.00  from holding Invesco Select Risk or generate 1.34% return on investment over 90 days.

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

Invesco Select Risk  vs.  Advent Claymore Convertible

Invesco Select Risk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Select Risk are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Invesco Select 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

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Advent Claymore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco Select and Advent Claymore

The main advantage of trading using opposite Invesco Select and Advent Claymore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Select 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 Invesco Select Risk 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.