Correlation Between Angel Oak and American Beacon
Can any of the company-specific risk be diversified away by investing in both Angel Oak and American Beacon 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 American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Angel Oak Ultrashort and American Beacon Balanced, you can compare the effects of market volatilities on Angel Oak and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and American Beacon.
Diversification Opportunities for Angel Oak and American Beacon
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Angel and American is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Ultrashort and American Beacon Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Balanced 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 Ultrashort are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Balanced has no effect on the direction of Angel Oak i.e., Angel Oak and American Beacon go up and down completely randomly.
Pair Corralation between Angel Oak and American Beacon
Assuming the 90 days horizon Angel Oak is expected to generate 2.43 times less return on investment than American Beacon. But when comparing it to its historical volatility, Angel Oak Ultrashort is 4.43 times less risky than American Beacon. It trades about 0.23 of its potential returns per unit of risk. American Beacon Balanced is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,121 in American Beacon Balanced on September 14, 2024 and sell it today you would earn a total of 203.00 from holding American Beacon Balanced or generate 18.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Angel Oak Ultrashort vs. American Beacon Balanced
Performance |
| Timeline |
| Angel Oak Ultrashort |
| American Beacon Balanced |
Angel Oak and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and American Beacon
The main advantage of trading using opposite Angel Oak and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Angel Oak vs. Ftfa Franklin Templeton Growth | Angel Oak vs. Vy Baron Growth | Angel Oak vs. Qs Defensive Growth | Angel Oak vs. T Rowe Price |
| American Beacon vs. Kentucky Tax Free Short To Medium | American Beacon vs. Rbc Short Duration | American Beacon vs. Virtus Multi Sector Short | American Beacon vs. Angel Oak Ultrashort |
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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