Correlation Between Angel Oak and Large Cap
Can any of the company-specific risk be diversified away by investing in both Angel Oak and Large Cap 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 Large Cap 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 Large Cap E, you can compare the effects of market volatilities on Angel Oak and Large Cap 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 Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Angel Oak and Large Cap.
Diversification Opportunities for Angel Oak and Large Cap
Poor diversification
The 3 months correlation between Angel and Large is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Angel Oak Ultrashort and Large Cap E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap E 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 Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap E has no effect on the direction of Angel Oak i.e., Angel Oak and Large Cap go up and down completely randomly.
Pair Corralation between Angel Oak and Large Cap
Assuming the 90 days horizon Angel Oak is expected to generate 2.43 times less return on investment than Large Cap. But when comparing it to its historical volatility, Angel Oak Ultrashort is 7.67 times less risky than Large Cap. It trades about 0.23 of its potential returns per unit of risk. Large Cap E is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,973 in Large Cap E on August 26, 2024 and sell it today you would earn a total of 652.00 from holding Large Cap E or generate 33.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Angel Oak Ultrashort vs. Large Cap E
Performance |
| Timeline |
| Angel Oak Ultrashort |
| Large Cap E |
Angel Oak and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Angel Oak and Large Cap
The main advantage of trading using opposite Angel Oak and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Angel Oak position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Angel Oak vs. Angel Oak Multi Strategy | Angel Oak vs. Angel Oak Multi Strategy | Angel Oak vs. Doubleline Income Solutions | Angel Oak vs. Angel Oak Ultrashort |
| Large Cap vs. Touchstone Ultra Short | Large Cap vs. Angel Oak Ultrashort | Large Cap vs. Siit Ultra Short | Large Cap vs. Calvert Short Duration |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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