Correlation Between Advent Claymore and Fidelity Advisorâ®

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

Diversification Opportunities for Advent Claymore and Fidelity Advisorâ®

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Advent and Fidelity is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Fidelity Advisor Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Sus 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 Advisorâ®. 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 Sus has no effect on the direction of Advent Claymore i.e., Advent Claymore and Fidelity Advisorâ® go up and down completely randomly.

Pair Corralation between Advent Claymore and Fidelity Advisorâ®

Assuming the 90 days horizon Advent Claymore Convertible is expected to generate 1.22 times more return on investment than Fidelity Advisorâ®. However, Advent Claymore is 1.22 times more volatile than Fidelity Advisor Sustainable. It trades about -0.02 of its potential returns per unit of risk. Fidelity Advisor Sustainable is currently generating about -0.09 per unit of risk. If you would invest  1,246  in Advent Claymore Convertible on October 10, 2024 and sell it today you would lose (11.00) from holding Advent Claymore Convertible or give up 0.88% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Advent Claymore Convertible  vs.  Fidelity Advisor Sustainable

 Performance 
       Timeline  
Advent Claymore Conv 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Fidelity Advisor Sus 

Risk-Adjusted Performance

0 of 100

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

Advent Claymore and Fidelity Advisorâ® Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Advent Claymore and Fidelity Advisorâ®

The main advantage of trading using opposite Advent Claymore and Fidelity Advisorâ® positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Claymore position performs unexpectedly, Fidelity Advisorâ® 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 Advisorâ® will offset losses from the drop in Fidelity Advisorâ®'s long position.
The idea behind Advent Claymore Convertible and Fidelity Advisor Sustainable 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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