Correlation Between Advent Claymore and Fidelity Advisor

Can any of the company-specific risk be diversified away by investing in both Advent Claymore and Fidelity Advisor 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 Fidelity Advisor 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 Fidelity Advisor Diversified, you can compare the effects of market volatilities on Advent Claymore and Fidelity Advisor 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 Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Claymore and Fidelity Advisor.

Diversification Opportunities for Advent Claymore and Fidelity Advisor

0.6

Correlation Coefficient

Advent Claymore  Fidelity Advisor

Poor diversification

The 3 months correlation between Advent and Fidelity is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Fidelity Advisor Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Div 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 Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Div has no effect on the direction of Advent Claymore i.e., Advent Claymore and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Advent Claymore and Fidelity Advisor

Assuming the 90 days horizon Advent Claymore Convertible is expected to under-perform the Fidelity Advisor. But the mutual fund apears to be less risky and, when comparing its historical volatility, Advent Claymore Convertible is 1.48 times less risky than Fidelity Advisor. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Fidelity Advisor Diversified is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,932  in Fidelity Advisor Diversified on October 24, 2024 and sell it today you would earn a total of  1,049  from holding Fidelity Advisor Diversified or generate 35.78% return on investment over 90 days.

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

Advent Claymore Convertible  vs.  Fidelity Advisor Diversified

Advent Claymore Conv

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 5 (%) 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.

Fidelity Advisor Div

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Advisor Diversified has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Fidelity Advisor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Advent Claymore and Fidelity Advisor

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

The idea behind Advent Claymore Convertible and Fidelity Advisor Diversified 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.