Correlation Between Advent Claymore and Columbia Overseas

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

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

Diversification Opportunities for Advent Claymore and Columbia Overseas

-0.34

Correlation Coefficient

Advent Claymore  Columbia Overseas

Very good diversification

The 3 months correlation between Advent and Columbia is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Columbia Overseas Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Overseas Value and Advent Claymore 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 Advent Claymore Convertible are associated (or correlated) with Columbia Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Overseas Value has no effect on the direction of Advent Claymore i.e., Advent Claymore and Columbia Overseas go up and down completely randomly.

Pair Corralation between Advent Claymore and Columbia Overseas

Assuming the 90 days horizon Advent Claymore Convertible is expected to under-perform the Columbia Overseas. But the mutual fund apears to be less risky and, when comparing its historical volatility, Advent Claymore Convertible is 1.26 times less risky than Columbia Overseas. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Columbia Overseas Value is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  1,039  in Columbia Overseas Value on December 21, 2024 and sell it today you would earn a total of  167.00  from holding Columbia Overseas Value or generate 16.07% return on investment over 90 days.

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

Advent Claymore Convertible  vs.  Columbia Overseas Value

Advent Claymore Conv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advent Claymore Convertible has generated negative risk-adjusted returns adding no value to fund investors. 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.

Columbia Overseas Value

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Overseas Value are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Overseas showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advent Claymore and Columbia Overseas

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

The idea behind Advent Claymore Convertible and Columbia Overseas Value 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.