Correlation Between Advent Claymore and Extended Market
Can any of the company-specific risk be diversified away by investing in both Advent Claymore and Extended Market 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 Extended Market 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 Extended Market Index, you can compare the effects of market volatilities on Advent Claymore and Extended Market 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 Extended Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Claymore and Extended Market.
Diversification Opportunities for Advent Claymore and Extended Market
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Advent and Extended is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index 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 Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of Advent Claymore i.e., Advent Claymore and Extended Market go up and down completely randomly.
Pair Corralation between Advent Claymore and Extended Market
Assuming the 90 days horizon Advent Claymore is expected to generate 1.58 times less return on investment than Extended Market. But when comparing it to its historical volatility, Advent Claymore Convertible is 1.64 times less risky than Extended Market. It trades about 0.17 of its potential returns per unit of risk. Extended Market Index is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,931 in Extended Market Index on May 22, 2025 and sell it today you would earn a total of 194.00 from holding Extended Market Index or generate 10.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advent Claymore Convertible vs. Extended Market Index
Performance |
| Timeline |
| Advent Claymore Conv |
| Extended Market Index |
Advent Claymore and Extended Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advent Claymore and Extended Market
The main advantage of trading using opposite Advent Claymore and Extended Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Claymore position performs unexpectedly, Extended Market 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 Extended Market will offset losses from the drop in Extended Market's long position.| Advent Claymore vs. Lord Abbett Inflation | Advent Claymore vs. Atac Inflation Rotation | Advent Claymore vs. Ab Bond Inflation | Advent Claymore vs. Inflation Adjusted Bond Fund |
| Extended Market vs. Prudential California Muni | Extended Market vs. Ab Municipal Bond | Extended Market vs. The National Tax Free | Extended Market vs. Morningstar Municipal Bond |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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