Correlation Between Advent Claymore and Northern Emerging

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

Diversification Opportunities for Advent Claymore and Northern Emerging

0.13

Correlation Coefficient

Advent Claymore  Northern Emerging

Average diversification

The 3 months correlation between Advent and Northern is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Northern Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Emerging Markets 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 Northern Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Emerging Markets has no effect on the direction of Advent Claymore i.e., Advent Claymore and Northern Emerging go up and down completely randomly.

Pair Corralation between Advent Claymore and Northern Emerging

Assuming the 90 days horizon Advent Claymore Convertible is expected to generate 0.87 times more return on investment than Northern Emerging. However, Advent Claymore Convertible is 1.16 times less risky than Northern Emerging. It trades about -0.02 of its potential returns per unit of risk. Northern Emerging Markets is currently generating about -0.18 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 Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Advent Claymore Convertible  vs.  Northern Emerging Markets

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.

Northern Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northern Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary 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 Northern Emerging

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

The idea behind Advent Claymore Convertible and Northern Emerging Markets 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.