Correlation Between Advent Claymore and Tax-free Conservative
Can any of the company-specific risk be diversified away by investing in both Advent Claymore and Tax-free Conservative 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 Tax-free Conservative 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 Tax Free Conservative, you can compare the effects of market volatilities on Advent Claymore and Tax-free Conservative 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 Tax-free Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Claymore and Tax-free Conservative.
Diversification Opportunities for Advent Claymore and Tax-free Conservative
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advent and Tax-free is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Tax Free Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Free Conservative 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 Tax-free Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Free Conservative has no effect on the direction of Advent Claymore i.e., Advent Claymore and Tax-free Conservative go up and down completely randomly.
Pair Corralation between Advent Claymore and Tax-free Conservative
Assuming the 90 days horizon Advent Claymore Convertible is expected to generate 16.87 times more return on investment than Tax-free Conservative. However, Advent Claymore is 16.87 times more volatile than Tax Free Conservative. It trades about 0.03 of its potential returns per unit of risk. Tax Free Conservative is currently generating about 0.2 per unit of risk. If you would invest 1,238 in Advent Claymore Convertible on May 27, 2025 and sell it today you would earn a total of 46.00 from holding Advent Claymore Convertible or generate 3.72% 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. Tax Free Conservative
Performance |
| Timeline |
| Advent Claymore Conv |
| Tax Free Conservative |
Advent Claymore and Tax-free Conservative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advent Claymore and Tax-free Conservative
The main advantage of trading using opposite Advent Claymore and Tax-free Conservative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Claymore position performs unexpectedly, Tax-free Conservative 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 Tax-free Conservative will offset losses from the drop in Tax-free Conservative's long position.| Advent Claymore vs. Scout E Bond | Advent Claymore vs. Versatile Bond Portfolio | Advent Claymore vs. Doubleline Low Duration | Advent Claymore vs. Morningstar Defensive Bond |
| Tax-free Conservative vs. Simt Mid Cap | Tax-free Conservative vs. Sit Emerging Markets | Tax-free Conservative vs. Simt High Yield | Tax-free Conservative vs. Simt Multi Asset Accumulation |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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