Correlation Between Advent Claymore and Gmo Resources

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

Diversification Opportunities for Advent Claymore and Gmo Resources

0.26

Correlation Coefficient

Advent Claymore  Gmo Resources

Modest diversification

The 3 months correlation between Advent and Gmo is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Gmo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Resources 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 Gmo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Resources has no effect on the direction of Advent Claymore i.e., Advent Claymore and Gmo Resources go up and down completely randomly.

Pair Corralation between Advent Claymore and Gmo Resources

Assuming the 90 days horizon Advent Claymore Convertible is expected to generate 0.48 times more return on investment than Gmo Resources. However, Advent Claymore Convertible is 2.1 times less risky than Gmo Resources. It trades about -0.04 of its potential returns per unit of risk. Gmo Resources is currently generating about -0.08 per unit of risk. If you would invest  1,258  in Advent Claymore Convertible on October 11, 2024 and sell it today you would lose (14.00) from holding Advent Claymore Convertible or give up 1.11% of portfolio value over 90 days.

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

Advent Claymore Convertible  vs.  Gmo Resources

Advent Claymore Conv

Risk-Adjusted Performance

0 of 100

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.

Gmo Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gmo Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Advent Claymore and Gmo Resources

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

The idea behind Advent Claymore Convertible and Gmo Resources 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.