Correlation Between Absolute Convertible and Advent Claymore
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Advent Claymore 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 Absolute Convertible and Advent Claymore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Advent Claymore Convertible, you can compare the effects of market volatilities on Absolute Convertible and Advent Claymore 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 Absolute Convertible with a short position of Advent Claymore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Advent Claymore.
Diversification Opportunities for Absolute Convertible and Advent Claymore
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Absolute and Advent is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Advent Claymore Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Claymore Conv and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Advent Claymore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Claymore Conv has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Advent Claymore go up and down completely randomly.
Pair Corralation between Absolute Convertible and Advent Claymore
Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to generate 0.08 times more return on investment than Advent Claymore. However, Absolute Convertible Arbitrage is 12.25 times less risky than Advent Claymore. It trades about 0.43 of its potential returns per unit of risk. Advent Claymore Convertible is currently generating about 0.02 per unit of risk. If you would invest 1,020 in Absolute Convertible Arbitrage on May 1, 2025 and sell it today you would earn a total of 142.00 from holding Absolute Convertible Arbitrage or generate 13.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Advent Claymore Convertible
Performance |
| Timeline |
| Absolute Convertible |
| Advent Claymore Conv |
Absolute Convertible and Advent Claymore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Advent Claymore
The main advantage of trading using opposite Absolute Convertible and Advent Claymore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Advent Claymore 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 Advent Claymore will offset losses from the drop in Advent Claymore's long position.| Absolute Convertible vs. California Municipal Portfolio | Absolute Convertible vs. Gmo High Yield | Absolute Convertible vs. Ab Bond Inflation | Absolute Convertible vs. Artisan High Income |
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Check out your portfolio center.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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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