Correlation Between Advent Claymore and M Large

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

Diversification Opportunities for Advent Claymore and M Large

0.86

Correlation Coefficient

Advent Claymore  M Large

Very poor diversification

The 3 months correlation between Advent and MTCGX is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and M Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Large Cap 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 M Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Large Cap has no effect on the direction of Advent Claymore i.e., Advent Claymore and M Large go up and down completely randomly.

Pair Corralation between Advent Claymore and M Large

Assuming the 90 days horizon Advent Claymore Convertible is expected to generate 0.62 times more return on investment than M Large. However, Advent Claymore Convertible is 1.61 times less risky than M Large. It trades about 0.12 of its potential returns per unit of risk. M Large Cap is currently generating about 0.05 per unit of risk. If you would invest  1,198  in Advent Claymore Convertible on March 23, 2025 and sell it today you would earn a total of  18.00  from holding Advent Claymore Convertible or generate 1.5% 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.  M Large Cap

Advent Claymore Conv

Risk-Adjusted Performance

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.

M Large Cap

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in M Large Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, M Large may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Pair Trading with Advent Claymore and M Large

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

The idea behind Advent Claymore Convertible and M Large Cap 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.