Correlation Between Advent Claymore and Vanguard Multi

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

Diversification Opportunities for Advent Claymore and Vanguard Multi

0.84

Correlation Coefficient

Advent Claymore  Vanguard Multi

Very poor diversification

The 3 months correlation between Advent and Vanguard is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Vanguard Multi Sector Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Multi Sector 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 Vanguard Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Multi Sector has no effect on the direction of Advent Claymore i.e., Advent Claymore and Vanguard Multi go up and down completely randomly.

Pair Corralation between Advent Claymore and Vanguard Multi

Assuming the 90 days horizon Advent Claymore Convertible is expected to under-perform the Vanguard Multi. In addition to that, Advent Claymore is 2.64 times more volatile than Vanguard Multi Sector Income. It trades about -0.02 of its total potential returns per unit of risk. Vanguard Multi Sector Income is currently generating about 0.09 per unit of volatility. If you would invest  801.00  in Vanguard Multi Sector Income on October 24, 2024 and sell it today you would earn a total of  104.00  from holding Vanguard Multi Sector Income or generate 12.98% return on investment over 90 days.

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

Advent Claymore Convertible  vs.  Vanguard Multi Sector Income

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.

Vanguard Multi Sector

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Multi Sector Income are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Vanguard Multi 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 Vanguard Multi

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

The idea behind Advent Claymore Convertible and Vanguard Multi Sector Income 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.