Correlation Between Angel Oak and Real Estate
Can any of the company-specific risk be diversified away by investing in both Angel Oak and Real Estate 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 Angel Oak and Real Estate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Angel Oak Multi Strategy and Real Estate Fund, you can compare the effects of market volatilities on Angel Oak and Real Estate 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 Angel Oak with a short position of Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Real Estate.
Diversification Opportunities for Angel Oak and Real Estate
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Angel and REAL is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Multi Strategy and Real Estate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Fund and Angel Oak 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 Angel Oak Multi Strategy are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Fund has no effect on the direction of Angel Oak i.e., Angel Oak and Real Estate go up and down completely randomly.
Pair Corralation between Angel Oak and Real Estate
Assuming the 90 days horizon Angel Oak is expected to generate 10.19 times less return on investment than Real Estate. But when comparing it to its historical volatility, Angel Oak Multi Strategy is 6.92 times less risky than Real Estate. It trades about 0.04 of its potential returns per unit of risk. Real Estate Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,773 in Real Estate Fund on August 28, 2024 and sell it today you would earn a total of 31.00 from holding Real Estate Fund or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Angel Oak Multi Strategy vs. Real Estate Fund
Performance |
| Timeline |
| Angel Oak Multi |
| Real Estate Fund |
Angel Oak and Real Estate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and Real Estate
The main advantage of trading using opposite Angel Oak and Real Estate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, Real Estate 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 Real Estate will offset losses from the drop in Real Estate's long position.| Angel Oak vs. Applied Finance Explorer | Angel Oak vs. Palm Valley Capital | Angel Oak vs. Lsv Small Cap | Angel Oak vs. Northern Small Cap |
| Real Estate vs. Realty Income | Real Estate vs. Dynex Capital | Real Estate vs. First Industrial Realty | Real Estate vs. Healthcare Realty Trust |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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