Correlation Between Advent Claymore and Vanguard Short-term

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

Diversification Opportunities for Advent Claymore and Vanguard Short-term

0.84

Correlation Coefficient

Advent Claymore  Vanguard Short-term

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 Short Term Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term 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 Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of Advent Claymore i.e., Advent Claymore and Vanguard Short-term go up and down completely randomly.

Pair Corralation between Advent Claymore and Vanguard Short-term

Assuming the 90 days horizon Advent Claymore Convertible is expected to generate 4.0 times more return on investment than Vanguard Short-term. However, Advent Claymore is 4.0 times more volatile than Vanguard Short Term Investment Grade. It trades about 0.15 of its potential returns per unit of risk. Vanguard Short Term Investment Grade is currently generating about 0.16 per unit of risk. If you would invest  1,178  in Advent Claymore Convertible on May 7, 2025 and sell it today you would earn a total of  76.00  from holding Advent Claymore Convertible or generate 6.45% 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 Short Term Investment

Advent Claymore Conv

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Advent Claymore may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Vanguard Short Term

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Short Term Investment Grade are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Vanguard Short-term 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 Short-term

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

The idea behind Advent Claymore Convertible and Vanguard Short Term Investment Grade 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.