Correlation Between Advent Claymore and Vanguard Total

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

Diversification Opportunities for Advent Claymore and Vanguard Total

0.99

Correlation Coefficient

Advent Claymore  Vanguard Total

No risk reduction

The 3 months correlation between Advent and Vanguard is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Advent Claymore Convertible and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock 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 Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Advent Claymore i.e., Advent Claymore and Vanguard Total go up and down completely randomly.

Pair Corralation between Advent Claymore and Vanguard Total

Assuming the 90 days horizon Advent Claymore is expected to generate 1.36 times less return on investment than Vanguard Total. But when comparing it to its historical volatility, Advent Claymore Convertible is 1.15 times less risky than Vanguard Total. It trades about 0.33 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  12,264  in Vanguard Total Stock on April 20, 2025 and sell it today you would earn a total of  2,786  from holding Vanguard Total Stock or generate 22.72% 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.  Vanguard Total Stock

Advent Claymore Conv

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Advent Claymore Convertible are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Advent Claymore showed solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Total Stock

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Total showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advent Claymore and Vanguard Total

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

The idea behind Advent Claymore Convertible and Vanguard Total Stock 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.